National Health Spending Growth Is Accelerating Again. Thanks Obamacare!



Over the past few years, the Obama administration has, on repeated occasions, implicitly credited Obamacare with substantially slowing the growth of national health care spending.

In November of last year, for example, President Obama said that "Despite some of the previous predictions, even as we've enrolled more people into the Affordable Care Act and given more people the security of health insurance, health care inflation has gone down every single year since the law passed, so that we now have the lowest increase in health care costs in 50 years." Obama did not explicitly say that the health law caused the decline, but that's the clear implication. In addition, as The Washington Post noted at the time, it's not quite true that spending growth dropped every year; the 2013 estimate reported a small increase from 2012.

A White House blog post published a month before Obama's statement was even more direct in drawing a causal link between the law and slow growth in U.S. health spending. The post opened by noting new government estimates indicating that "national health expenditures rose at historically slow rates in 2013, continuing the exceptionally slow growth in health costs seen in recent years. This slow growth, which is thanks in part to the Affordable Care Act, is already generating major benefits for both the Federal budget and our economy." The post carefully says later on that Obamacare is not the only factor. It is, however, the only one highlighted in the first paragraph.

The link between the health care law and the slowdown in health spending growth has always been weak. Several studies have found that the economic recession was responsible for the vast majority of the reduction in growth. (A related slowdown in Medicare spending was, according to one study, mostly a result of the prescription drug benefit passed during the Bush administration.) The suggestion that Obamacare was significantly responsible for the slowdown was never very plausible anyway, given the timing: Most of the law's major features didn't take effect until the beginning of 2014, years after the slowdown started.

A report released yesterday estimating that the growth in national health spending has accelerated renders the link even weaker still. In fact, it strongly suggests that Obamacare's coverage expansion is now causing health care spending to accelerate back to levels not seen since before the recession.

After several years of historically low, sub-4 percent growth, national health spending is now expected to rise at 5.5 percent in 2014—the highest its been since 2007—actuaries at the federal government's Centers for Medicare and Medicaid Services (CMS) reported yesterday. The report further projects that growth will increase slightly, on average, over the next decade, to 5.8 percent. The authors write that the latest growth estimate "primarily reflects" the effects of the health law's major coverage expansions, as well as renewed economic growth and an aging population. Of these factors, Obamacare is the most significant, at least for the moment. The accelerated growth in 2014, the authors write, was "mostly driven by health insurance coverage expansions under the ACA, as 8.4 million Americans are anticipated to have gained insurance coverage primarily through Medicaid or the new health insurance Marketplaces."

Obamacare isn't holding spending growth down to historically low levels. It's helping to accelerate the growth of health spending following a brief, temporary slowdown.

This is, in some sense, by design. The law expands coverage to millions of people, and studies have found that the expansion of coverage tends to lead to greater utilization of health care services. The Oregon Health Insurance Experiment, a randomized controlled experiment in which a group of people were assigned Medicaid and then tracked along with a group who were not, found that the people who got coverage under the experiment used more health care, and that, in general, coverage served as a financial shock absorber. Another study of the health law's effects published yesterday in the Journal of the American Medical Association (JAMA) found similarly that, following the implementation of Obamacare, people reported better access to medicine and physicians, as well as greater ability to afford care—all factors that suggest an increase in utilization.

As in the Oregon experiment, the JAMA study found an increase in self-reported health status. But the Oregon experiment gives us reason to doubt those findings; despite the self-reported increase in feelings of health, researchers were unable to detect any significant improvements in objective measurements of physical health.

The Oregon study looked at Medicaid, not private health insurance. But even still, the results of the Oregon experiment may turn out to be similar to the outcomes for Obamacare: Greater coverage, insulation from medically related financial shocks, expanded access to providers and utilization of health care services—but no clear overall improvement on actual health. In the meantime, the law's expanded coverage, and the increased use of health care services it allows, will contribute to the nation's ever-growing health care spending. So we'll be paying for health care—but not for health.

NEXT: School System Wants $77K from Michigan Mom to Fulfill Her FOIA Request | Updated!

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. Obamacare is working!

    1. Absolutely! I’m 51 and for the first time in my adult life have NO health insurance because my company made the wise decision to pay the fine rather than provide healthcare. And after I pay my bills I have nothing left over. But wasn’t that the plan all along? To reward lazy, irresponsible people with free healthcare while those of us who are actually paying for it are left in the cold. Progressives love dishing up payback. It’s what they live for.

      1. Ditto for me. The worthless ‘platinum’ plan would cost me about $700 per month at age 44. Fuck no. There us no fucking way I’m laying that to not get the doctor I want and for the shit coverage and garbage deductibles it provides. Will probably jump to over $800 next year.

        1. Yeah, the best option is to pay the fine and then sign up for Obamacare only when you get sick since they can’t deny pre-existing conditions. And then stop paying for it after services are rendered. Yeah, that’s a scumbag move but I don’t see any other option.

          1. When I spreadsheeted it out, it was always cheaper to go with the Bronze plan and just pay the higher deductibles than pay more in premiums with a lower deductible. *Always.* For any amount of your health care costs for the year.

            Anything above the Bronze plan was a complete sucker bet that saved you nothing in your yearly expenses if you got sick, but stuck you for the higher premium cost if you didn’t get sick.

            Basically, a Bronze HSA plan is a tax for a catastrophic plan + subsidies to others, which allows you to pay for expenses with pre tax money, up to $3500.

            A shinier metal is a tax for a catastrophic plan + subsidies to others are the same, plus a sucker prepayment for health care you may or may not use, and no ability to use an HSA (though the prepay premiums are pre tax too).

            Of course, the “wait til you get sick” plan isn’t bad either, unless you have a very sudden incident that requires services before you can sign up.

      2. fundamental transformation, bitches. Only president i can think of whose primary aim was to diminish the country and its citizens

        1. Except for all the other presidents, you mean.

  2. “Everything is proceeding as I have foreseen”..

    Emperor Obama

    1. I think the Emperor’s claim of mystical foresight was bluster.

      He foresaw Luke seeking out Vader – yeah, no shit Sherlock given the way their last encounter ended. Somehow he didn’t foresee getting thrown down that shaft by his apprentice, a bunch of overgrown teddy bears with stone age technology blowing up his shield generator, or the Colt 45 pitchman blowing up his fully operational battle station.

      1. Looking for sense in anything George Lucas is associated with became a fool’s game right after Raiders. Lucas may be one of the worst writers who actually has his work produced that I’ve ever seen.

        1. ^^THIS^^ and he raped indiana jones.

      2. The One said he’d bend the cost curve, and he did.

        He didn’t say which way he was going to bend it.

    2. He is kind of a retard Palpatine, isn’t he?

  3. Where’s PBP to say how it’s a free market solution?

    1. It’s a free market where you are forced to buy the product! It’s a penalty that crossdresses as a tax! It’s everything to everyone!

      1. well, it’s not crossdressing after the SCOTUS gelded it.

    2. You mean have Tulpa deliberately wind you up with his sockpuppet?

      1. no. I’m just testing if the predictability of said commenter is enough to start a betting pool on where I can clean up. All your bitcoin are belong to us.

      2. eh, I’m not a believer in the Tulpa Singularity Theory. Tulpa has never been smart enough to hide his writing voice.

  4. I’m sitting in an urgent care waiting room right now thanks to being assaulted at a minor league baseball game.

    1. that’s not assault. Revel in the cheap theatrics and sub par play!

      1. I reveled in a guy throwing a beer at me for no reason and when I followed him to find out wtf was accosted by him and a buddy.

        1. wow, so you weren’t saying, metaphorically, that the minor league game assaulted you.

          That sucks man.

        2. you were asking for it with what you were wearing.

          1. I gotta stop dressing like such a slut

            1. because people throw beer at sluts?

              well, they BUY beer FOR sluts… close enough.

              1. I usually offer sluts other fluids. Fresh off the tap.

        3. That’s where the carry permit and associated hardware would have come in handy.

          1. im all for the 2nd amendment but only a fucking asshole would bring a gun to a little league game.

  5. How is this possible? We passed a law saying healthcare insurance is affordable, it was stamped and everything.

    1. I know. It’s just like that law we have that outlaws killing people… except this makes it worse instead of having no impact whatsoever.

    2. “We passed a law saying healthcare insurance is affordable, it was stamped and everything.”

      And the law is a TAX! Or something like that.

  6. Liberals say health care costs are increasing because pent-up demand for health care is finally being met.

    You know that, Suderman. This was never about “bending the health care cost curve downward” or “decreasing every family’s premium by $2,500 per year”. It was NEVER about costs. It was ALL about getting 30 million on the government-financed health care dole.

    So quit writing stories about the “horrors” of ObamaCare’s costs. No one cares about costs. No one EVER cares until it is too late. And you know that too.

    1. Liberals say health care costs are increasing because pent-up demand for health care is finally being met.

      Yeah, no.

      This was sold as both increasing coverage and access, and “bending the cost curve” at the same time.

      Apparently, its possible to increase demand in a market with inelastic supply, and have prices drop. Or at least, that’s what we were invited to believe.

      1. Apparently, you missed Jonathan Gruber’s videos. What liberals SOLD ObamaCare as being and what they are saying now are two different things

        No liberal ever says they are “bending the cost care curve” nowadays – are they? They always say – “look how many people are getting coverage, thanks to ObamaCare”.

        I did not say how ObamaCare was sold – I said what liberals are saying. Which is what Gruber confesses in his videos.

        And I am also saying – no one GIVES A DAMN ABOUT COSTS. NO ONE. Because costs are based on % of your income. So, who the hell cares if health insurers increase premiums by 300% in one year? The ObamaCare enrollee always pays the same, since his subsidy is based on his income. And no one cares that the deficit gets blown to hell.

        No one cares about health care costs or how much it increases our taxes and deficits. No one cares.

        1. The 95% of the country that is not getting Obamacare subsidies most certainly do care about the cost of their insurance and they are very pissed off.

          Also, even a lot of the people getting the subsidies care. Many of those people don’t want health insurance and view even subsidized health insurance as a rip off. Who cares if something you don’t want and being forced to pay for is “subsidized”.

          Other than share holders and insurance execs and Obama cronies who wrote the bill and have cashed out in the private sector, the number of people who actually benefited from Obamacare is extraordinarily small.

          1. the number of people who actually benefited from Obamacare is extraordinarily small.

            Very true. And the number who have been negatively impacted and/or lost their coverage (such as myself) is quite large. But who cares about the Middle Class? It’s the low-income people who have made bad decisions that are most important. But who’s going to pay their way when those of us who pay the majority of the taxes are gone?

            1. It is not fair that you get better access to health care than some crack addict street person who begs and steals for a living and is happy to do so.

              1. Besides, I don’t need healthcare because my ‘privilege’ will keep me healthy!

          2. John, John, John, you are so hopelessly NAIVE. The American people are dumb. They are not sophisticated enough to think cause-and-effect. 99% of that 95% are more than happy to agree with liberals that the cause of the cost increase is due to greedy insurance company executives and their pursuit of profit.

            Why are all those liberal, budget busting programs NEVER terminated? Because liberals are better at selling the “benefits” of those programs (ignoring the negatives) and the gullible public blindly follows.

            You still don’t get it, do you? It’s not about facts. It was never about facts. The American people cannot handle the facts.

            If the American people cared about costs, Obama would not have won in 2012. Yes, Romney wasn’t a perfect candidate. But Obama, despite all the “unhappiness” with Obamacare, re-elected him.

            You need to view your ignorant American neighbors with greater skepticism. They are idiots. They have been idiots since at least 1913.

        2. Look, somewhere there isn’t a college rape happenning. Get your priorities straight.

        3. I did not say how ObamaCare was sold – I said what liberals are saying.

          Well, they were boasting about lower rates of cost growth until just recently.

          But, yeah, I know they made promises that are now memory-holed. That’s the whole point.

          1. Yes, I know that Val Jarrett “tried,” to claim credit but that was some time ago. Now, they ignore costs and blithely point to “millions more covered”.

            They never cared about costs because the American people do not care about costs.

            And they can always find a Bob, the Screaming Scapegoat.

      2. why are you conflating how it was sold with what it has done? Words and actions are not necessarily in sync with this administration.

      3. “Or at least, that’s what we were invited to believe.”

        Ordered to believe, as I recall

    2. “. It was NEVER about costs. It was ALL about getting 30 million on the government-financed health care dole.”


      It was primarily all about *controlling* the health care choices of the entire population. Getting the uninsured some insurance was always just a rationale for imposing control on the rest of the population.

    3. Every single thing a progressive does, from the moment it rises from its coffin at dusk until the life force leaves it at sunrise is focused ultimately on increasing the level of Marxism. Period.

      In fact, if progtards thought they could have their Maoist/Soviet dictatorship take over they would gladly re-slave the blacks and kill all the gays and trannys to make it happen. They are certainly willing to kill all the Jews to get their batshit agenda passed. Even a lot of the prog Jews are for it.

  7. “…it strongly suggests that Obamacare’s coverage expansion is now causing health care spending to accelerate back to levels not seen since before the recession.”

    So what you’re saying is… Obama got us out of the recession!

  8. Look, the consequences of your political decisions are your problem.

    1. +1 Economically ignorant Supreme Court justice

  9. Healthcare spending slowed when the economy tanked. Now that the economy remains weak, healthcare spending is speeding its growth. Even a liberal could figure the answer to that conundrum, if he were willing to think about it.

    1. “Even a liberal could figure the answer to that conundrum, if he were willing to think about it.”

      But what’s the chance of that ever happening.

  10. After busting my ass to earn good healthcare, thanks to the bullshit healthcare law and all the douchebags that supported it, my carrier is dropping coverage for next year.

    All these pieces of shit that supported this mess, did so because it made them feel good. They felt they were “doing something”. All while failing to realize that socialism and central planning is an effing failure. But they want to ignore the evidence, and keep “trying” so they can feel good while screwing over future generations that can’t kick them in the balls because these morons will be dead when the bills are due.

    When was the last time there was crisis that occurred with the Internet, watches, shoes, computers, printers, fax machines, cell phones, socks, underwear, lotion, vitamins, and so on? How long did it last?

    That’s right, things not touched by the government seem to work just fine when free individuals have choices and can reward good economic actors, and punish bad ones.

  11. So, Peter, health care spending is going to increase to a rate of 5.8%. Know what the rate increase was from 1990 to 2008? 7.2%.

    Keep trying.

  12. Why stop at 2008? Mmm, those cherries taste good.

    Excess growth decreased from more than 3% during 2003 to less than 1% starting in July 2005 and continuing, for the most part, until near the end of the recession in June 2009. Excess growth exceeded 1% during the post-recession period, until May 2011, when it again dropped below 1%, going negative during the latter part of that year. If we use 1% as a threshold to denote moderation in excess health care spending, these data show that July 2005 marked the onset of moderation.

    Note the part, “starting in July 2005.” Thanks, President Bush! (Yes, that’s sarcasm. I don’t give him credit for much except trying to privatize SS and cutting taxes).

    And what has Barry done for us? How about raising premiums higher than they otherwise would have been? Thanks, Barry!

  13. Start making cash right now… Get more time with your family by doing jobs that only require for you to have a computer and an internet access and you can have that at your home. Start bringing up to $8596 a month. I’ve started this job and I’ve never been happier and now I am sharing it with you, so you can try it too. You can check it out here…

    1. Gee, I’d like to make $8596 a month…so I can afford to pay for an ObamaCare plan!

Please to post comments

Comments are closed.