Human Capital & Careers

Obamacare Fuels Rapid Rise in Health Spending

As the main provisions of the ACA were implemented, spending increased 5.3% and 5.8% in 2014 and 2015, respectively.
Matthew HellerDecember 5, 2016
Obamacare Fuels Rapid Rise in Health Spending

The Affordable Care Act has triggered “dramatic changes” in healthcare, with health spending in 2015 growing at its fastest rate since 2007, according to a new government report.

Spending rose 5.8% to $3.2 trillion, or $9,990 per person, last year as Obamacare expanded health insurance coverage through marketplace insurance plans and Medicaid, the Centers for Medicare and Medicaid Services said.

The main coverage provisions of the ACA were implemented in 2014 and 2015. Health spending also rose 5.3% in 2014 after five years of historically low growth between 2009 and 2013.

“The health sector experienced dramatic changes in 2014 and 2015,” the report said, noting that over those two years, the insured share of the population increased 4.9 percentage points to 90.9%, and the federal share of health spending rose to 29%.

The faster health spending growth, combined with lower growth in the overall economy, resulted in an increase in the health spending share of gross domestic product — from 17.2% in 2013 to 17.8% in 2015.

“Increases of this magnitude in the health spending share of the overall economy typically occur around periods of economic recession,” the report said. “However, coverage expansions in 2014 and 2015, along with rapid increases in retail prescription drug spending, contributed to the increased share more than five years after the end of the Great Recession of 2007–09.”

The federal government is now, for the first time, the largest sponsor of healthcare, reflecting continued enrollment increases in Medicaid.

Medicaid payments increased 12.6% in 2015, accounting for 37% of total federal health spending.

The report acknowledged that the 2014-2015 period was unique but “given the significant changes in health insurance coverage that took place, health spending is projected to increase as a share of the overall economy over the next ten years and will be influenced by the aging of the population, changing economic conditions, and faster medical price growth.”