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The rollout of President Obama’s health care law may have deeply disappointed its supporters, but on at least one front, the Affordable Care Act is beating expectations: its cost.

Over the next few years, the government is expected to spend billions of dollars less than originally projected on the law, analysts said, with both the Medicaid expansion and the subsidies for private insurance plans ending up less expensive than anticipated.

The law’s provisions to control costs could prove increasingly important as the economy improves, demand for health care increases and spending picks back up.

“It was a trend that was happening; we noticed that trend; we took advantage of that trend,” said Jason L. Furman, the chairman of the White House’s Council of Economic Advisers. “Some of it was the Affordable Care Act catching up with the private sector, and some of it was pushing the private sector forward.”

Administration officials have pointed to falling hospital readmission rates as one strong sign that cost-control provisions in the Affordable Care Act are working. Also, they noted that a growing number of insurers and health care providers are agreeing to contracts that pay for the quality of care, rather than the quantity, another indication that the law’s encouragement on that front is starting to pay dividends.

But those are responsible for only a tiny portion of the slowing rise of health care costs; other changes, like rising deductibles and copays that discourage some people from seeking extra services, play a bigger role, analysts say.

To be sure, the Affordable Care Act will lead to a drastic bump in health spending by the government starting next year, with an estimated nine million Americans signing up for Medicaid and perhaps as many as seven million buying a subsidized health plan through the government exchanges. But economists expect the underlying rate of spending growth to remain low.

And whatever the reasons for the slower growth, taxpayers appear set to reap some benefits.

Already, the Congressional Budget Office has quietly erased hundreds of billions of dollars from its projections. It now estimates that Medicare spending in 2020 will be $137 billion lower than it thought in 2010, a drop of 15 percent; Medicaid spending will be $85 billion, or 16 percent, lower; and private health insurance premiums are expected to be about 9 percent lower.

Some economists say they believe that the Congressional Budget Office might be underestimating the long-term effect of the slowdown, because it expects that spending growth will eventually return to its previous trend line. David M. Cutler, a Harvard economist and former Obama adviser, cautiously suggests that the slower growth might stick around, and if so the savings for the government might be a whopping $750 billion over 10 years, he says.

Whether such improvements will last depends on whether private firms — nudged along by Washington — create and retain incentives to keep spending low.

“In the past five decades, there are only two periods when we’ve been able to sustain low excess health care cost growth for an extended period,” Mr. Levitt, of the Kaiser foundation, said, referring to the current trend and a period in the 1990s, when the Clinton administration tried and failed at overhauling the health care system. “There was a sense in the system: ‘Something is coming, and we need to get ready for it.’ ”

This time may be more durable. Insurance and hospital executives in Massachusetts, Illinois and California, among other places where reforms have gone the furthest, report a consensus that spending growth had become unsustainable, and that expectations that Washington would force changes to the system spurred them to make changes themselves.

One study by the liberal Center for American Progress, for instance, found that an average individual premium for a plan with relatively high out-of-pocket expenses in the insurance marketplaces is $3,900, about 16 percent lower than the $4,700 expected. If those savings were to stick, the Affordable Care Act would cost about $190 billion less than expected over the course of a decade, the center estimated.

Whatever the reasons, the overall slowdown in health costs has led to lower 2014 insurance premiums than analysts anticipated. That means not only cheaper plans for many consumers, but significant savings for the government. http://www.nytimes.com/2013/12/03/business/affordable-care-act-so-far-
seems-likely-to-cost-less-than-expected.html?ref=politics&_r=0

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