The Widespread Slowdown in Health Spending Growth

Doctors go over a patient's charts in the emergency room.

Researchers provide an in-depth analysis of the most recent health care spending projection for 2014–2019 and the reasons why the current spending projection is significantly lower than the one made immediately after the Affordable Care Act (ACA) was passed.

The Issue

The Centers for Medicare & Medicaid Services recently released health spending projections for 2014–2019 that are $2.5 trillion lower than projections made in the wake of the ACA becoming law. The primary factor for the lowered projections is historically low growth in health care spending since the recession. The report authors, however, point to several unmeasured effects of the ACA that also could be leading to lower-than-expected health care spending projections.

Key Findings

  • The projected cost of expanding Medicaid under the ACA is now $94 billion less than the forecast made at the time the ACA became law.

  • The projected cost of providing subsidies to consumers to help purchase health plans in the marketplaces is now $125 billion lower than the forecast made at the time of the ACA’s passage.

  • In total, CMS projects $2.5 trillion less in public and private health care spending between 2014 and 2019 compared to projections made in 2010.

Conclusion

The most recent health spending projections are significantly lower than those made immediately following the passage of the ACA, in large part because of historically low growth in health spending since the recession, but also because the projected cost of implementing the ACA is now lower than originally anticipated. Furthermore, the current projections may still be high, given that premiums for health plans offered in the marketplaces are much lower than experts originally thought they would be.

About the Grantee

The Urban Institute is a nonprofit, nonpartisan policy research and educational organization that examines the social, economic and governance problems facing the nation. For more information, visit www.urban.org. Follow the Urban Institute on Twitter www.urban.org/twitter or Facebook www.urban.org/facebook. More information specific to the Urban Institute’s Health Policy Center, its staff, and its recent research can be found at www.healthpolicycenter.org.