A new analysis shows that the 2014 increase in national health expenditures is attributable mostly to 10.6 million Americans gaining health coverage, not an increase in the price of health services or health care spending per insured American. The report, prepared by researchers at the Urban Institute with funding from the Robert Wood Johnson Foundation, illustrates that without the recent Affordable Care Act (ACA) coverage expansions—through Medicaid and the insurance marketplaces—the rate of growth in health spending would have been close to the growth rate in gross domestic product (GDP).
Using data on historic spending growth from the Centers for Medicare & Medicaid Services (CMS), the authors estimate that the ACA coverage expansion accounted for $60 billion in spending in 2014. Using the Urban Institute’s Health Insurance Policy Simulation Model (HIPSM), the authors calculate that the ACA coverage expansion added $39.9 billion in health spending. These two estimates suggest a 2014 spending increase between 3.5 percent (using CMS data) and 4.2 percent (using HIPSM) in the absence of the ACA coverage expansion, which is much closer to the 2014 increase in GDP (3.9%) than the actual 2014 increase in national health expenditures (5.6%). The researchers say this recent bump in spending can be explained mostly by 10.6 million people gaining health insurance.
"A major reason that health spending growth has increased recently is that more people are covered," said Kathy Hempstead, who directs coverage issues at the Robert Wood Johnson Foundation. "While increased spending on specialty drugs is a concern, other health service prices appear to be holding the line."
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