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Health Spending Growth Slower after ACA

States expanding Medicaid demonstrated lower per capita spending growth (Volume 10, Issue 8)

Healthcare delivery and financing in the United States has undergone considerable changes in the past decade, especially with the passage of the Affordable Care Act (ACA) in 2010. In addition to providing affordable healthcare coverage to more individuals, the ACA has impacted economic growth and healthcare spending. However, with the heterogeneity of individual states’ healthcare laws and policies, it is important to acknowledge the different impact national policies have had on different states. Specifically, how are different states consuming health care per capita across different federally and privately funded payers and programs, such as Medicare, Medicaid, and private insurance?

This study estimates and analyzes health spending trends across all 50 states and Washington, DC from 2004-2014 using State Health Expenditure Accounts (SHEA), specifically personal health care spending on Medicare, Medicaid, and private insurance. While spending trends were widely variable across all states, there were some patterns noted when states were categorized into those that utilized federal coverage expansion and those that did not.

In general, states that accepted Medicaid expansion had lower per capita spending growth on Medicaid, personal health care, and private health insurance compared to non-expansion states.

Among all states, health care spending continued to grow but not to quite as high levels as were experienced before the end of the economic recession and passage of the ACA. Medicare spending was minimally effected in most states.

This study has a few take-away points despite the current uncertainty of health care with the Trump Administration and  Congress. First, while the data from the SHEAs are preliminary due to the opening of health insurance marketplaces in 2014, they show that most states experienced decreased per capita spending growth rates compared to the periods before the economic recovery of 2009, which correlates with the passage of the ACA. Secondly, states that accepted Medicaid expansion experienced even further reduced per capita healthcare spending growth compared to those that did not accept Medicaid expansion. Thus, while healthcare expenditures have increased following the passage of the ACA, Obama’s health care achievement partially explains the attenuated rate of healthcare spending growth in the US.

This Policy Prescriptions® review is written by Ryan Jacobs. He is a medical student at Baylor College of Medicine.

Abstract

As the US health sector evolves and changes, it is informative to estimate and analyze health spending trends at the state level. These estimates, which provide information about consumption of health care by residents of a state, serve as a baseline for state and national-level policy discussions. This study examines per capita health spending by state of residence and per enrollee spending for the three largest payers (Medicare, Medicaid, and private health insurance) through 2014. Moreover, it discusses in detail the impacts of the Affordable Care Act implementation and the most recent economic recession and recovery on health spending at the state level. According to this analysis, these factors affected overall annual growth in state health spending and the payers and programs that paid for that care. They did not, however, substantially change state rankings based on per capita spending levels over the period. 

PMID: 28615193 

Lassman, D, et al. Health Affairs. 2017; 36 (7): 1318-1327.