by Andrew J. Rettenmaier, Thomas R. Saving, Zijun Wang
National Center for Policy Analysis
July 24, 2014
For years, health care spending has outpaced economic growth. However, in 2012, health care spending as a share of the economy declined slightly for the second year in a row. This news was greeted in some quarters as evidence that the Affordable Care Act (ACA) was beginning to bend the cost curve downward. In reality, the recent slowdown of health care expenditures is just one of many slowdowns. Further, new data indicate that the trend is already reversing. The ACA expands insurance coverage to the uninsured through subsidized, mandated insurance purchases and by extending Medicaid benefits to individuals under the age of 65 who earn up to 138 percent of the poverty level in states that have chosen to expand coverage. Both of these reforms are expected to increase health care demand and thus spending in coming years.