This installment of Hall Render’s Health Law Broadcast series on health care reform is designed to provide you with the insight, analysis and practical suggestions with respect to the various reform initiatives that will affect your organization.
The Congressional Budget Office (“CBO”) recently released a report detailing the nation’s budget and economic outlook for the next decade. The report outlines three broad categories of federal spending: (i) mandatory spending; (ii) discretionary spending; and (iii) net interest. Of particular importance to the health care industry is that mandatory spending accounts for more than half of federal outlays, and of that amount almost 40% is currently attributed to Medicare, Medicaid and other health care programs.
The CBO projects that spending for federal health care programs will more than double between 2012 and 2022, rising from approximately $847 billion to $1.8 trillion per year. Although much of this growth can be attributable to the aging population and the rising cost for health care, the Affordable Care Act has significantly increased the number of nonelderly people who can receive assistance through health care programs and introduced major changes to the nation’s health insurance systems. For example, the report states that Medicaid enrollment is expected to jump from 67 million people to around 95 million by 2022. Additionally, the Affordable Care Act authorizes federal subsidies for certain individuals who purchase insurance through state health insurance exchanges.
In order to harness some of this growth, the Affordable Care Act places constraints on the rates that Medicare will pay to health care providers. Even with this limitation, the CBO anticipates Medicare expenses will grow by an average of 6% per year. Although this budget outlook comes as no surprise, it is a further indication that Medicare and Medicaid will continue to pursue its efforts at cost containment. Look for additional activity from the Center for Medicare and Medicaid Innovation that will provide opportunities for health care providers to affiliate, pursue provider alignment and become more cost efficient.
If you have any questions or would like additional information about this topic, please contact R. Blake Griese at 317.977.1409
or bgriese@wp.hallrender.com, Brian C. Betner at317.977.1466 or bbetner@wp.hallrender.com or your regular Hall Render attorney.
