The Evidence on Recent Health Care Spending Growth and the Impact of the Affordable Care Act

A mother and daughter wait for their appointment at the hospital.

Analysis finds that the Affordable Care Act (ACA) has expanded coverage to millions without causing a permanent spike in health spending.

 

The Issue

Health expenditures have outpaced the U.S. economy for decades, and still do, but for many reasons including the ACA, health spending has recently leveled off.

Key Findings

  • National health expenditures have been growing in recent years at about the rate of increase in gross domestic product (GDP) plus 1 percent, following decades of growth at GDP plus 2.5 percent.

  • States with rapid growth rates typically have little insurer or provider competition.

Conclusion

The authors of the brief say that enrollment increases have played a major role in Medicaid spending growth, with growth in spending per enrollee below that of other payers. This largely reflects the cost containment efforts of states.

About the Urban Institute

The nonprofit Urban Institute is dedicated to elevating the debate on social and economic policy. For nearly five decades, Urban scholars have conducted research and offered evidence-based solutions that improve lives and strengthen communities across a rapidly urbanizing world. Their objective research helps expand opportunities for all, reduce hardship among the most vulnerable, and strengthen the effectiveness of the public sector. Visit the Urban Institute’s Health Policy Center for more information specific to its staff and its recent research.