No Surprise: Health Care Spending Accelerated in 2014
One of the most ballyhooed promises of Obamacare was the law's supposed effect on Americans' health care spending. Frequent talk of the law "bending the cost curve down" was intended to allay concerns on both sides of the aisle that the Affordable Care Act would actually make health care more expensive for individuals in the private market and the government itself.
Supporters of the law claimed this wouldn't be the case, but data released late last year by the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS) show very clearly that, again, they were wrong.
Although the ACA was enacted in 2010, its most significant provisions went into effect in 2014. The expansion of Medicaid eligibility, as well as health insurance premium tax credits and cost-sharing subsidies paid by the federal government, contributed to federal government health care spending growth of 11.7 percent in 2014 — 8.2 percentage points faster than in 2013. Correspondingly, the federal government’s share of health care spending increased from 26.0 percent in 2013 to 28.0 percent in 2014.
Other provisions of the ACA that took effect prior to 2014 continued to affect overall health spending — including changes to Medicare and Medicaid provider payments, increased Medicaid prescription drug rebates, reductions to the size of the Medicare Part D coverage gap, prescription drug industry fees, and implementation of the medical loss ratio requirement for private insurers.
For regular readers of our work, CMS's findings will come as no surprise. In our paper on direct primary care, released last year, we detailed how health care costs for both the government and for private individuals were going up in all sorts of ways: through mandated coverage, higher premiums, bigger deductibles, less-generous copays, and other cost-transferring practices. From the very beginning, the mechanics of Obamacare clearly pointed to significantly increased, not decreased, health care spending in the United States; the results since its passage bear out that very straightforward reality.
