Growth in Healthcare Spending Slowest on Record

Figures show that real per enrollee growth in health spending has shown the slowest growth on record according to figures from the Center for Medicare and Medicaid Services and the Bureau of Economic Analysis. The Center for Medicare and Medicaid Services administers those programs at the federal level while the Bureau of Economic Analysis provides economic data for the government.

For 2000-2007, the increase for private health insurance was 5%, as was Medicare. The increase for Medicaid was nearly zero. These numbers started going down before Obamacare was passed, meaning that these decreases are not entirely attributable to Obamacare For 2007-2010, the increases were 4% for private insurance and 2% for Medicare and 0% for Medicaid. Following the passage of Obamacare, these trends continued downward. For the period 2010-2013, private insurance increased by 1.5%, Medicare did not increase at all, while Medicaid showed a slight decrease. While the problems with the healthcare.gov website have been in the news, the real success of Obamacare will hinge on whether these trends accelerate or continue given that its stated purpose is to make healthcare more affordable.

Figures from the Presidents’ Council of Economic Advisors showed that the rate of increase for total national health expenditures was declining during the 2000-2007 time frame. From 1965 to 2010, total national health expenditures went up 4.5% annually. For the period from 2000 to 2007, that figure was 3.9%. For 2007 to 2010, the figure was 1.8% while for 2010-2013, that figure was 1.3%.

In a recent 25-page report about healthcare costs, the Presidents’ Council of Economic Advisors stated, “The evidence is clear that recent trends in healthcare spending and price growth reflect, at least in part, ongoing structural changes in the healthcare sector. The showdown may be raising employment today and, if continued, will substantially raise living standards in the years ahead.” Since the rate of healthcare increases is slowing or stopping, that will free up money for employers to hire more workers. Given the recent protests at Wal-Marts across the country, this could create even more pressure for Wal-Mart to raise wages.

But the slowing rate of increase is not being felt across the board. The City of Grant City paid 10% more this year for its health insurance plan for its employees, and alternatives were substantially higher or would have come with less benefits. A similar plan for the County of Worth would have cost tens of thousands of dollars annually. And some users who got into the healthcare.gov website have been offered more expensive policies than the ones they already have.