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A surge of insurance enrollment due to rising employment and President Obama’s health care law has meant a rise in spending on health care, leaving policy experts wondering whether the government and private businesses can control spending as the economy gets stronger and millions more Americans come under the coverage.
The news comes at a time President Obama promotes the success of the Affordable Care Act in covering more Americans at less cost than anticipated.
“Following several years of decline, 2013 was striking for the increased use by patients of all parts of the U.S. health care system,” Murray Aitken, executive director of the IMS Institute for Healthcare Informatics, said in a statement.
Some health care experts and economists, however, apprehend that an expanded use of the health system might start to have the opposite effect. Americans feeling more economically confident might demand more procedures from doctors and hospitals. Insurers paying more money for those procedures might, in time, increase premiums, cutting into wage gains.
The government might end up spending more on the health law than current projections imply. Many other analysts said they had long expected health spending to increase.
“We knew this was coming,” said Douglas Holtz-Eakin, a former head of the Congressional Budget Office and a prominent Republican economist, of rising spending because of the coverage expansion and improving economy. “The question now is whether we can hold spending down.”
The question is whether health spending might grow moderately, with a one-time bump from new Affordable Care Act enrollees, or whether it might surge, with potentially damaging consequences for the fiscal deficit and wages. Economists from both the right and left — including in the White House — have said that there is no greater threat to the government’s budget than soaring health spending.
Rising insurance premiums would increase the cost of the health law’s expansion. The health spending growth started falling in the mid-2000s and reached historical lows over the last five years. The recession counts for much or even most of the decline, economists think, as workers lost their jobs and their health coverage, and budget-conscious families chose to reduce their out-of-pocket spending.
But at the same time, structural changes to how health care gets delivered and paid for — changes made by the government, insurers, doctors and hospitals — also helped hold spending down. Many insurers, for example, began charging much higher co-pays and deductibles, spurring their enrollees to use less care.