Is Obamacare Responsible for a Spending Slowdown?

Has Obamacare slowed health care cost growth? While supporters of the sweeping health reform law contend it’s the Affordable Care Act that has slowed the rise in health care spending, James Capretta, senior fellow at the Ethics and Public Policy Center, says that health care spending has been falling for years:

– Health care expenditures rose 8.5 percent in 2001 and 9.6 percent in 2002.
– After that, the rise in spending began to fall, rising just 4.8 percent in 2008.
– It rose 3.8 percent in 2009 and 3.9 percent in 2010.
– In 2013, health care spending rose 3.6 percent.

Spending growth, says Capretta, was on a downward trajectory long before President Obama took office and before the Affordable Care Act was passed in 2010. As Capretta writes, “[T]he growth rate of national health spending was cut in half during the time of the Bush presidency.”

If not Obamacare, what is responsible for the spending slowdown? It was largely due to the 2007-2009 recession, says Capretta, but also due to the rise in high deductible insurance paired with Health Savings Accounts (HSAs). HSAs were enacted in 2003, the same time that health care spending growth began to fall. Such plans put more of the responsibility for health care spending into the hands of consumers, which incentivizes patients to control costs. Since 2005, HSA enrollment has risen from 1 million people to 17 million.

Capretta does note one aspect of Obamacare that is slowing Medicare cost growth: the law cuts payments to hospitals and other facilities serving Medicare patients. But those cuts, says Capretta, will make Medicare so unattractive compared to private insurance that some hospitals may leave the Medicare program altogether, making it harder for Medicare enrollees to access doctors.

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