Health Spending Went Up Last Year Because More People Were Getting Care

Health spending in the U.S. picked up again in 2015, but the growth was driven largely by millions of Americans getting coverage through the Affordable Care Act, rather than price increases for care, according to a new government reportthat tracks the nation’s overall healthcare tab.

The 5.8% increase – which pushed total healthcare spending to $3.2 trillion last year – was the highest annual growth rate since before the Great Recession, which began in late 2007.

And it outpaced overall economic growth in 2015, making healthcare an even larger share of the U.S. economy.

While such surges in health spending have traditionally worried economists and policymakers, the 2015 increase is somewhat different, the new report from independent actuaries at the U.S. Department of Health and Human Services suggests.

In the past, mounting prices for hospital stays, doctor’s visits and other medical goods and services were largely responsible for skyrocketing health spending.

But the new report indicates that the latest increase – which tracks with a similar uptick in 2014 – was fueled by increased use of healthcare, likely caused by the health law, often called Obamacare.

“There are some real benefits with this kind of expanded spending,” said Charles Roehrig, an economist who directs the nonprofit Altarum Institute’s Center for Sustainable Health Spending.

“There are people who are getting better healthcare. They are feeling more secure. They are less at risk financially. … I’d rather have a bunch of people better off than a bunch of industries cashing in.”

The law’s coverage expansion – which began in 2014 – has helped more than 20 million previously uninsured people gain health insurance.

“The health sector experienced dramatic changes in 2014 and 2015,” conclude the authors of the new study, published in the journal Health Affairs. “These changes played a major role in determining the overall growth in health spending.”

Whether the current trend is sustainable remains unclear.

The coverage expansion has been financed by a large increase in government spending.

And although the spending is offset with other revenue in the health law so the deficit does not increase, 2015 marks the first year that the federal government is the single largest payer for healthcare, outpacing employers, individual households and state and local governments, according to the report.

There are additional worrying signs that prices for medical care are increasing in 2016. That is expected to put more pressure on policymakers to take new steps to control healthcare costs.

President-elect Donald Trump and congressional Republicans have pledged to repeal Obamacare early next year. They have promised a replacement, but they have not indicated what it will be.

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