NCPA - National Center for Policy Analysis

The Cost Of Over Insurance: National Health Expenditures Rising Again

August 6, 2015

The Centers for Medicare & Medicaid Services have released their estimates of national health spending for 2014 through 2024.

"Health spending growth in the United States is projected to average 5.8 percent for 2014-24, reflecting the Affordable Care Act's (ACA) coverage expansions, faster economic growth and population aging. Recent historically low growth rates in the use of medical goods and services, as well as medical prices, are expected to gradually increase. The health share of U.S. gross domestic product is projected to rise from 17.4 percent in 2013 to 19.6 percent in 2024."

The ACA has increased health spending with only marginal improvement in access to care. However, the population continues to age and statisticians also take into account the positive relationship between economic growth and health spending. They expect the economy to be relatively strong over the next decade, and estimate the rate of growth of health spending will exceed the rate of growth of Gross Domestic Product by only 1.1 percent. 

Yet, American patients still do not control enough of our health spending directly to have an impact on national health expenditures. There is evidence that allowing patients to control more health dollars directly reduces costs and does not harm most patients. This has led to increased adoption of consumer-driven plans in the employer-based market. Remarkably, plans that are eligible to be paired with Health Savings Accounts are widely available in Obamacare's exchanges, says senior fellow John R. Graham of the National Center for Policy Analysis.

However, despite their successes, consumer-driven plans have not increased the share of health spending controlled directly by patients. U.S. health care will continue to suffer from a crisis over insurance. As long as patients continue to lose control of their health dollars to third-party bureaucracies, health care will be plagued with inefficiency and rising costs.

Source: John R. Graham, "The Cost Of Over Insurance: National Health Expenditures Rising Again," Forbes, August 3, 2015.


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