One Chart Debunks One of the Biggest Republican Myths About Obamacare


Conservatives were sure: Obamacare will break the bank and dramatically increase health care spending.

But the latest numbers from the Congressional Budget Office tell a much different story. Rather than increasing federal spending, the Affordable Care Act has coincided with a $611 billion reduction in the projected growth in health care spending over the decade beginning in 2010. That's including the cost of Medicaid expansion that will cover 27 million more Americans and $1 trillion in premium tax subsidy credits.

The ACA is costing Americans way less than we thought. Even with all of the coverage expansions in Obamacare and a dramatic reduction in the number of uninsured Americans, the U.S. is spending about $600 billion less than the $11 trillion or so the CBO projected it would in 2010 without any reform at all.

The Center on Budget and Policy Priorities put this in a chart for all the Obamacare naysayers:

Center on Budget and Policy Priorities

This is very good news. As Vox's Ezra Klein put it, "The government is spending less on health care with Obamacare than it expected to spend without Obamacare."

How is this happening? Aside from Obamacare, there are plenty of reasons the U.S. is saving so much money. For one, the Great Recession severely sliced down most Americans' projected income growth, reducing the amount they can afford to actually spend on health care. It's unclear how much the recession lowered health care spending, but the figure is believed to be extremely large.

Reform also cut Medicare reimbursement rates, thereby transferring some of the costs to the elderly. Plus, there are the 22 states that have refused to expand Medicaid payments for about 4.9 million people.

But experts think Obamacare has contributed to the spending slowdown in major ways. The Kaiser Family Foundation CEO Drew Altman writes that the cost-containment measures in the ACA include "new limits on how much insurance companies can charge for administration and profits (with rebates to consumers if they charge too much), and state review of rates proposed by insurance companies," as well as rules designed to prevent costly unnecessary procedures. These measures appear to be working. The health industry has been forced to lower costs.

Why you should care: Republicans insisted that health care reform would break the bank, but here we are short of five years out, and the reality is that health care costs are growing much more slowly than originally anticipated. Whoops!

By the end of Obama's term, an additional 36 million Americans will have some health insurance. This is a huge drop in the number of uninsured Americans, a number which peaked at 17.1% in late 2013. Fewer Americans are forgoing necessary health care. If premiums drop, the costs could be even lower. Reports that Obamacare would ruin the country have turned out to be wildly exaggerated, and by the way, Republicans still have no plausible alternative.