Study reveals how Affordable Care Act, recession affected healthcare spending

Economic and health-sector factors like the ACA and the recession had “clear state-specific impacts” on recent healthcare spending trends, a new report says. (Getty/TheaDesign)

When the Affordable Care Act went into full effect in 2014 and expanded insurance coverage for millions, most states saw their per capita personal healthcare spending rise as well, according to a new government report.

The report, produced by the Centers for Medicare & Medicaid Services’ Office of the Actuary and published Wednesday in the Health Affairs journal, uses state-level data up to 2014 to measure how major events like the ACA and the recent economic recession and recovery affected healthcare spending trends.

But although the ACA’s coverage expansions may have increased per capita health spending overall, spending in Medicaid expansion and nonexpansion states grew at similar rates between 2013 and 2014—4.4% and 5.5%, respectively, the report noted.

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Researchers said two factors are at play in this finding: accelerated growth in the use of healthcare goods and services (because of the increase in insured individuals) in expansion states relative to nonexpansion states and faster growth in spending per insured person in nonexpansion states compared to expansion states.

Here are some other notable findings from the report, broken down by major payer:

  • Per enrollee spending in Medicaid declined 5.1% in expansion states in 2014, but increased 5.1% in nonexpansion states. Generally, Medicaid expansion was the driver behind recent trends in per enrollee spending, as it added less-expensive enrollees to the mix in expansion states.
  • In private health insurance, per enrollee spending increased an average of 3.3% between 2009 and 2014. Here, too, Medicaid expansion played a role, as total private health insurance spending grew more rapidly in states that did not expand Medicaid eligibility by 2014.
  • For Medicare, one of the factors driving spending trends was baby boomers starting to age into the system. From 2012 to 2013, per enrollee spending in Medicare increased at modest rates, the report said, mainly because the average age of the eligible population became younger.

The recession and recovery, meanwhile, had a “substantial and sustained effect” on healthcare spending and insurance coverage in the years that followed it, the report said. For example, during 2010 to 2013, every state experienced a deceleration in per capita healthcare spending growth compared to the 2004 to 2009 period.

Looking at spending trends by region, New England and Mideast regions had the highest levels of total per capita personal healthcare spending in 2014, while the Rocky Mountain and Southwest regions had the lowest levels. On the state level, per capita personal healthcare spending was the lowest in Utah, at $5,982, and the highest in Alaska, at $11,064. That compares to a national per capita average of $8,045.

The data make clear that economic and health-sector factors like the ACA and the recession had “clear state-specific impacts” on healthcare spending, the study authors conclude. However, it’s still worth noting that there was little change in the relative rankings of overall per capita health spending by state.