Last year, spending on health care in the US rose at its fastest rate since the 2008 recession, climbing 5.3% to $3.03 trillion, and representing 17.5% of the country’s gross domestic product. It’s a rise more or less in line with predictions, and one that has a lot to do with expanded health care coverage under the Affordable Care Act (ACA).
In a report published on December 2 in Health Affairs, the Centers for Medicare and Medicaid Services’ Office of Actuaries wrote that “the expansion of insurance coverage, particularly through Medicaid and private health insurance, and rapid growth in retail prescription drug spending” fueled the growth, which outpaced the overall economy.
That overall growth translated into a 4.5% per-capita spending increase, which the report further breaks down into 3 factors: changes in the age and sex mix of the population, medical price inflation, and “residual use and intensity”—basically, the amount of health care usage that remains once the effects of age, population, sex, and inflation are removed. Of those 3 factors, residual use was responsible for nearly half of the 4.5% increase, with medical price inflation not far behind at about 40% of the increase. Demographic changes accounted for about 13% of the growth. Bottom line: more people are using more health care, largely due to expanded coverage made available through the ACA, with some analysts theorizing that the lack of insurance created a “pent-up demand” for certain procedures.