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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Obama’s health care law can’t keep pace with medical spending

By Tony Pugh Tribune News Service

WASHINGTON – Public and private spending for U.S. health care increased to $3.2 trillion in 2015 or nearly $10,000 per person, according to a government report released Friday.

The 5.8 percent spending increase last year is up from a 5.3 percent hike in 2014. Both increases followed five straight years of historically slower growth from 2009 to 2013.

Credit the Affordable Care Act for the faster health care spending growth the last two years.

President Barack Obama’s signature health law expanded enrollment in individual marketplace insurance and in Medicaid, the joint state/federal health plan for low-income Americans.

The controversial health law is now facing possible repeal by the GOP-led Congress and President-elect Donald Trump. Trump has chosen as his health and human services secretary Rep. Tom Price, R-Ga., an outspoken critic of Obamacare who has written his own legislation to replace it.

Nearly 91 percent of the U.S. population had some form of health insurance coverage in 2015 compared to 86 percent in 2013, mainly because of the Affordable Care Act.

The number of uninsured Americans fell by 15 million during that three-year period, as the health law allowed more people to qualify for Medicaid coverage and compelled others to purchase private marketplace insurance or face a fine.

These coverage expansions – and slower overall economic growth – caused the share of the economy devoted to health care to reach 17.8 percent in 2015, up from 17.4 percent in 2014.

Over the last 55 years, the share of the gross domestic product devoted to health care has grown most around times of economic recession.

But spending for health services typically stabilizes two to three years after a recession as pre-negotiated prices for medical services work their way through the health system and more people become eligible for public programs like Medicaid.

“While the 2014 and 2015 (health care spending) increases occurred more than five years after the nation’s last recession ended, they coincided with 9.7 million individuals gaining private health insurance coverage and 10.3 million more people enrolling in Medicaid coverage,” said a statement from Anne B. Martin, an economist in the Office of the Actuary at the federal Centers for Medicare & Medicaid Services.

Health care’s share of the national economy is likely to continue growing over the next decade because of a wave of aging baby boomers and faster medical price growth.

A 9 percent rise in retail prescription drug spending – the largest increase of any health service sector in 2015 – also fueled the accelerated spending trend. Americans paid $324.6 billion for retail prescription drugs last year mainly because of increased spending for generic medications, costly new drugs and price hikes for existing brand-name drugs.

Spending for private health insurance jumped 7.2 percent in 2015 to $1.1 trillion. Private insurance continues to be the major U.S. payer for health care, accounting for one-third of all health care spending in 2015 and 2014.

Spending for hospital care increased 5.6 percent in 2015 to $1 trillion, driven mainly by greater use and intensity of services. Hospital services account for 32 percent of total health spending.

For Medicare, the national health plan for older Americans, program spending increased 4.5 percent to $646.2 billion in 2015. That accounted for 20 percent of total health expenditures in 2015. Medicare enrollment reached 54.3 million last year, up 2.7 percent from 2014.

Medicaid spending hit $545.1 billion last year, up 9.7 percent from 2014. The program accounts for 17 percent of national health expenditures.