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  • Economic Recovery and ACA to Increase Health Care Spending, Say Experts

    Growth in health care spending in 2010 was at an historic low of 3.9%, due in part to losses in employment and health insurance coverage associated with the recession, say authors of an article published this month in Health Affairs. However, spending is expected to grow 5.8 % per year from 2010 through 2020, 1.1% faster than the expected average annual rise in gross domestic product (GDP). As a result, the health share of GDP is projected to increase from 17.6 % in 2009 to 19.8% by 2020. The largest impact on the growth of health spending is expected to occur in 2014, when major coverage expansions from Affordable Care Act (ACA) of 2010 begin. The increased demand in response to expanded insurance coverage for physician services and pharmaceuticals is anticipated to be higher than that of hospital services. One reason, say the authors, is that insurance expansions typically can lead to more efficient use of health care services (that is, more preventive care), which would increase office visits and prescription drugs, and decrease reliance on hospital care. As a result, the projected share of national health spending in 2020 accounted for by physicians (19%) and prescription drugs (11%) is higher than it would have been in the absence of ACA, and the hospital share (30 %) is lower.

    Also in 2014, out-of-pocket spending for individuals and families is projected to decline from 12% to 10%, largely due to the uninsured attaining health coverage through Medicaid or health insurance exchange plans. In addition, cost sharing for exchange plan enrollees in families with incomes at or below 250% of the federal poverty level is subsidized, thereby reducing their out-of-pocket spending at the point-of-service. However, out-of-pocket spending growth is anticipated to reach a projection-period high of 6.6% in 2018. This outcome is expected as enrollment shifts to higher cost-sharing employer-sponsored insurance due to the existence of the new excise tax on high-cost insurance plans.

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