Health spending growth rate surges to 5.3% under ACA

The Affordable Care Act expanded health coverage to millions of Americans in 2014. Because more people had insurance to pay for healthcare services, demand and spending predictably went up more quickly.

But the important question for the future remains the same: Will healthcare be able to avoid large spending spikes and move to a more sustainable payment system?

“It’s absolutely no surprise that 2014 had a higher rate of increase because of all the additional people getting coverage,” said Paul Ginsburg, a health economist at the University of Southern California. “The purpose of covering them was allowing them to use more services.”

The 5.3% annual growth rate was the highest since before the 2008 recession. More recently, the U.S. healthcare system recorded historically low growth in expenditures. Many observers believe the recession was a primary driver because the high rates of unemployment battered demand for healthcare services.

Now the tide is slowly turning, although actuaries and experts don’t expect health expenditures will return to the days of double-digit yearly growth.

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Jeffrey R. Ungvary President

Jeffrey R. Ungvary