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Health Policy

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Has Faster Health Care Spending Growth Returned?

Research shows the 2014 increase in national health expenditures is attributable mostly to 10.6 million Americans gaining health coverage, not an increase in the price of health services or health care spending per insured American.

The Issue

Without the recent Affordable Care Act (ACA) coverage expansions—through Medicaid and the insurance marketplaces—the rate of growth in health spending would have been close to the growth rate in gross domestic product (GDP).

Key Findings

  • ACA coverage expansion accounted for $60 billion in spending in 2014, according to Centers for Medicare & Medicaid Services (CMS) data.

  • Using the Urban Institute’s Health Insurance Policy Simulation Model (HIPSM), the authors calculate that the ACA coverage expansion added $39.9 billion in health spending.

Conclusion

These two estimates suggest a 2014 spending increase between 3.5 percent (using CMS data) and 4.2 percent (using HIPSM) in the absence of the ACA coverage expansion, which is much closer to the 2014 increase in GDP (3.9%) than the actual 2014 increase in national health expenditures (5.6%).

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. For more information specific to the Urban Institute’s Health Policy Center, its staff, and its recent research, visit http://www.urban.org/policy-centers/health-policy-center.

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