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Health spending to increase with ACA


Although the Affordable Care Act has implemented different ways to remove waste from the healthcare system, it has yet to succeed at reducing costs. Instead, the ACA might lead to more spending now that millions of people have gained insurance.

Healthcare experts predict medical spending, which currently accounts for almost 18 percent of the nation's gross domestic product, will keep growing 1.2 percentage points faster than the economy during the next 20 years, The New York Times reported.

"We have been consistently bending the cost curve over the last 20 years, but the kinds of things that we do don't tend to be permanent," Charles Roehrig, who runs the Center for Sustainable Health Spending at the Altarum Institute, told the newspaper. "It will take a lot of work just to stay on the same curve we have been on for a while."

Most industry experts say the ACA is well-suited to reduce healthcare waste and transition the market away from fee-for-service reimbursements to more value-based care. The question, however, is whether the Affordable Care Act can consistently--and permanently--bend the cost curve.

Roehrig suggests the decrease in spending growth during the last 10 years is simply a response to two recessions and isn't actually a fundamental shift in how American healthcare operates.

He pointed to more employers offering high-deductible plans to their workers, which discourage healthcare utilization. For example, 66 percent of companies with at least 1,000 employees offered at least one high-deductible plan to their employees in 2013, and almost 80 percent of employers said they will do so this year, FierceHealthPayer previously reported.

But the effects of more high-deductible plans, along with some state Medicaid programs limiting access to high-cost services, have stabilized. And as the economy improves, so too will health spending, particularly with the 8 million consumers who signed up for coverage through the ACA, Roehrig said.

In fact, Roehrig predicts health spending will soon be growing faster than the GDP and that spending will eventually comprise 30 percent of it. Additionally, a 2013 study from Kaiser Family Foundation estimated healthcare costs will return to historic averages of about 7 percent by 2019.

To learn more:
- read the New York Times article

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Study: Health spending to rise back to historic levels