Health Reform's Impact: Health Spending to Shrink by $590 Billion, Family Premiums by $2,000, over Next Decade, New Estimates Show

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<p>New estimates released today by The Commonwealth Fund and the Center for American Progress (CAP) show that the health reform law passed in March could reduce annual growth in health care spending from 6.3 percent to 5.7 percent over the next decade—a savings of $590 billion—while lowering annual premiums by nearly $2,000 for the typical family and extending coverage to 32 million previously uninsured individuals by 2019. <br /><br /><a href="/publications/issue-briefs/2010/may/impact-health-reform-health-system-spending">The Impact of Health Reform on Health System Spending</a>, by CAP senior fellow and Harvard economist David Cutler, Commonwealth Fund president Karen Davis, and Fund senior research associate Kristof Stremikis, concludes that significant payment and system reform provisions in the Patient Protection and Affordable Care Act will begin to realign incentives within the health care system and reduce cost growth far in excess of that predicted by the Congressional Budget Office and the Centers for Medicare and Medicaid Services' Office of the Actuary. <br /><br />The analysis finds that the health reform law will result in: </p>
<li>total reductions in health care spending of $590 billion from 2010 to 2019;  </li>
<li>a reduction in the annual growth rate in national health expenditures from 6.3 percent to 5.7 percent from 2010 to 2019; </li>
<li>savings of nearly $2,000 on annual health care premiums for the typical family by 2019; </li>
<li>a reduction in the deficit of up to $400 billion over 10 years; and </li>
<li>Medicare savings of $524 billion. </li>
<p>"The Patient Protection and Affordable Care Act gives us the tools to improve the quality and lower the cost of medical care," said David Cutler. "Now we need to use those tools to make reform work." <br /><br />Noting that the nation has entered "a new era in American health care," Fund president Karen Davis said that "by changing the way we pay for and deliver care to reward high performance, we will begin to bend the health care cost curve, and all Americans will see real economic benefits." <br /></p>