The growth in healthcare spending has returned to a fast gait with the arrival of Obamacare and expensive new drugs.
National healthcare spending grew by 5.3 percent last year, the Centers for Medicare and Medicaid Services reported Wednesday in the journal Health Affairs. The data give the first picture of how the new Obamacare insurance plans are affecting U.S. spending, now that low-income people can buy plans with the help of government subsidies.
But while the spending rate is now accelerating after six years of historically low levels, it hasn’t spiked like in the early 2000s, when spending grew between 7 and 10 percent each year. Spending per person is also growing more slowly than during that high-growth period, climbing by 4.5 percent last year.
Healthcare spending has long worried economists, who note that the U.S. spends about twice per person on healthcare than the average developed country. Switzerland, which comes in second on that measure, spends 72 percent of what the U.S. spends per capita, according to the Peter G. Peterson Foundation.
Whether President Obama’s signature domestic law would help tamp down the fast rate of growth has been a heated political question, since the president promised before Obamacare was passed that it would bend the cost curve.
As health spending slowed in recent years, his administration cautiously suggested it could be partially due to the healthcare law, although some economists said it was more likely because of the recession.
The numbers released Wednesday indicate that by providing insurance to more people, Obamacare, with other factors, is helping push spending upward, but not faster than before the law was passed. And that’s the point the Obama administration is emphasizing.
“Today’s numbers on national health spending show that as millions more Americans gained coverage in 2014, health care spending stayed well below the trend seen prior to the Affordable Care Act,” said Richard Frank, an assistant secretary at the Department of Health and Human Services.
Another big spending driver were new, expensive specialty drugs, such as medications used to treat hepatitis C. Spending on prescription drugs grew 12.2 percent last year, the fastest rate of growth since 2002, right before Congress passed Medicare’s prescription drug coverage program.
Spending on doctor and hospital services grew more slowly, by 4.6 percent and 4.1 percent, respectively.
But spending in those categories and nearly every other one grew faster than the rate of inflation, a concern for consumer advocates who have long wrung their hands over the increasingly high costs Americans must pay for healthcare.
Still, there was some indication that last year’s growth in per-person spending was driven more by increased use of healthcare services rather than higher prices, at least compared to years past.
Economists attributed nearly half of the 4.5 percent growth in per capital spending to more people accessing healthcare. Between 2009 and 2013, the increase in per-person spending was mostly driven by higher prices. And from 2004 to 2008, when the growth of healthcare spending was skyrocketing, about 60 percent of it was due to higher prices and 30 percent due to increased use, on average.
