Health Care Costs 101: ACA Spurs Modest Growth

by Katherine B. Wilson

May 4, 2016

After five years of slow growth, national health spending grew by 5.3% in 2014, up from 2.9% in 2013. The faster growth was due in part to coverage expansion under the Affordable Care Act (ACA) and increased spending on prescription drugs. US health spending reached $3.0 trillion in 2014, or $9,523 per capita, and accounted for 17.5% of gross domestic product (GDP).

Health Care Costs 101: ACA Spurs Modest Growth, which relies on the most recent data available, details how much is spent on health care in the US, which services are purchased, and who pays.

Key findings include:

  • Federal subsidies for ACA Marketplace premiums and cost sharing totaled $18.5 billion, accounting for 12% of the $151 billion in new health spending in 2014.

  • Federal spending on Medicaid increased 18.4% (compared to 0.9% for states), as the federal government fully funded the ACA's expansion of Medicaid eligibility in participating states.

  • Spending on prescription drugs increased by $32.4 billion, or 12.2%, much faster than recent years. New hepatitis C drugs accounted for $11.3 billion, more than one-third of the increase in all prescription drug spending.

  • Household spending on direct purchase insurance rose only 2.2% (more slowly than overall spending at 5.3% and similar to overall household spending at 2.0%) despite a 19.5% increase in enrollment levels for direct purchase insurance.

  • The growth rate in per capita spending more than doubled from 2.1% in 2013 to 4.5% in 2014.

Linked Data show/hide