In 2014, the nominal economic growth rate in the US was 3.91%. Not a great number but not a bad number.
In 2014, healthcare spending grew by 5.3%. Given context that is a great number
Total spending for health care in the United States increased 5.3 percent and reached $3.0 trillion in 2014, or $9,523 per person (Exhibit 1). This was faster than the rate of growth in 2013 (2.9 percent), which was the lowest in the fifty-five-year history of the National Health Expenditure Accounts. The acceleration in health spending growth in 2014 followed five consecutive years of historically low growth, which averaged 3.7 percent. Health care spending grew 1.2 percentage points faster than the overall economy in 2014 (when the nominal gross domestic product [GDP] increased 4.1 percent), resulting in a 0.2-percentage-point increase in the health spending share of GDP—to 17.5 percent. By comparison, the health spending share of GDP remained between 17.3 percent and 17.4 percent from 2009 to 2013.
The past few years had seen healthcare spending at or below nominal growth in the economy. That led to a stabilization or decline in healthcare spending to GDP ratio for several years which is a massive deal for long term federal fiscal planning.
But 2014 saw the share of GDP going to healthcare go up. Did something strange happen in 2014?
Why yes, 15 million more people got coverage and they used that coverage.
If it costs .2% GDP net to cover 15 million or more people that is dirt cheap and a good value for the money.
And a final piece of intriguing potential for good news:
All-time record low growth of 3.6% in 2013 revised down to 2.9%. Some reason to expect similar revisions next year https://t.co/KUYJBHDwnQ
— Altarum_CSHS (@Altarum_CSHS) December 2, 2015
Patricia Kayden
Thanks Obama on both counts!!
Baud
I’m currently at the doctor in celebration of this good news. Thanks, Obama.
BGinCHI
All while the Senate is conspiring to vote on repealing O-care again.
If they turn out to be an alien race planted here to destroy the earth I will not for one second be surprised.
Benw
High fives all around!
Richard, there must be some kind of estimates of how fast healthcare costs would rise if everyone got rolled into Medicare, or some other fairly simple way of going to a single payer system. Do you have any info on that?
Richard Mayhew
@Benw: No idea, nor do I have a good idea where to find that data. I would be shocked if someone does not have a decent guesstimate out there, just don’t know where to look for it.
D58826
That darn Obama. That’s almost within a rounding error of JEB!’S promise of 4%.
Southern Goth
My premiums are going up by 20% if I stay with my current health insurance. I’m self-employed.
Speaking of gaming, part of it is because my insurer decided to map my family into a lower deductible silver plan. We are on a silver plan, but the deductibles went down for the plan by a few hundred dollars a year and the premiums shot up by 20%.
RaflW
If it costs .2% GDP net to cover 15 million or more people that is dirt cheap and a good value for the money.
This is a very useful piece of data, Richard.
BTW, my premiums are going up 51% for 2016. Am I mad? Actually, no. And I know I’m unusual in that, but when I switched to this plan two years ago, I got a significant reduction in premiums from the old plan I’d been locked into for years. Guaranteed issue meant I could finally shop around.
I suspected then that the new plan was underpriced. 2016 confirms my suspicion. The coverage is fantastic, claims processing is nearly invisible it works so well, and I’m 50 years old and paying about 2/3rds of the average per person health care costs cited in the OP. For a grandfathered, (and now non-marketed) zero deductible Platinum plan (I’m guessing the actuarial value is very, very high), I’ll take it, and be very grateful that I can afford it. I wish everyone could handle their 2016 bumps, I know I’m quite privileged.
MomSense
Richard, do you know if anyone is figuring out to what extent people are under treated even with health insurance? I am, fortunately, in fairly good health but I am going without vision screenings, even though I have a family history of eye disease, because they are too expensive and not covered by my insurance.
MomSense
@RaflW:
To what extent are premiums spiking because of the congressional risk corridor fuckery? The only tweak the Republicans have attempted to make, opting usually for repeal, is to mess with one of the ways we protect consumers from premium rate hikes.
Florida Frog
First, I very grateful for the PPACA. Without it, my pre-existing condition would prevent me from having coverage at all. But my husband and I just signed up for a $20,000 annual premium bronze plan with a $6,800 deductible and no coverage at all (except for wellness visits) until the deductible is met. It is pretty painful. We don’t qualify for a tax credit and will manage but this has got to be a real problem even for people who make the median income or a bit more.
Richard Mayhew
@Florida Frog: And cases like your’s are the next big step — either at the state level for 1332 action or Healthcare Reform V2 (getting subsidies so total premium costs are capped at X percent of income instead of a cliff at 400% FPL)
Kelly
Hi Richard,
I signed us up for 2016 on the federal (Oregon) exchange for the first time last week. The big surprise was the browse 2016 plans option said we’d get a $557 subsidy. After actually selecting a plan and completing the sign up the subsidy was $75. Is this sort of discrepancy common?
Thanks for years of great info.
Marc
Obamacare just keeps on winning. Thanks, Richard.
Richard Mayhew
@Kelly: I am not sure, I don’t have specific knowledge of your financial situation nor Oregon in general.
I would call a navigator and have them talk through how the subsidy changed as this sounds funky to me.
Kelly
@Richard Mayhew: I found some appeal paperwork I can send in. We’ll be in the 300% to 400% FPL bracket which oughta limit the premium to 9.5% of income. When I looked up the second silver my arithmetic came to $557. I’ll put that in the appeal and send it all in. The exchange wanted id form my wife and a 2014 fed tax form. I don’t think those documentation issues would change the subsidy but what do I really know. I’ll look up local navigators.
thanks!
RaflW
@MomSense: To what extent are premiums spiking because of the congressional risk corridor fuckery?
Seems like a question for Richard, if he knows…
jl
Thanks for informative post. This is good news many health economists thought could never happen back in the bad old days.
Richard Mayhew
@jl: check your email
Warren Terra
Annual economic growth of 4% is pretty damned solid. If sustainable rather than a bubble, it’s great. I don’t know why you disparage it.
Richard Mayhew
@Warren Terra: nominal not real so inflation is built in
Kelly
@Richard Mayhew: User Error! I went to the “report a life change” page and reentered everything. Now I’ve got my subsidy.
thanks Kelly
Richard Mayhew
@Kelly: excellent