Robert Samuelson muses over why the rate of increase in healthcare spending slowed for a few years only to start rising again:
“There’s a great debate about how much [of the slowdown] is due to the economy and how much is from health system changes,†says Drew Altman, head of the Kaiser Family Foundation, a health-care think tank. Altman figures that the weak economy was the main cause, explaining about 60 percent of the slowdown, as people “put off care that they [could].â€
But when the economy recovers, the trend reverses. Not surprisingly, the CMS actuaries cite improving economic conditions as one factor fueling the rebound in health spending last year and in the future. Another factor in 2014 was an 8.4 million surge in Americans with health insurance, mostly reflecting the Affordable Care Act (ACA). People with insurance use more health services than people without.
Looking ahead, the CMS actuaries say that the aging population will boost spending as more people move into Medicare (up 19 million by 2024, or 37 percent) and Medicaid (also up 19 million, 33 percent). As people age, their health costs rise. Medicaid is hit both by an aging population — it covers nursing home care for the poor elderly and disabled — and liberalized eligibility requirements under the ACA.
Let’s clear up one misconception from the get-go. Healthcare spending never went down. Only its rate of increase went down.
That’s been part of the pattern of healthcare spending over the last half century. The rate at which spending increases goes in fits and starts but spending always increases and it continues to increase far faster than other spending.
You can’t appeal to market economics for explanations for all of this because healthcare does not operate under a market system.
