By Douglas Holtz-Eakin
Roughly a decade ago, on October 1, 2013, the ignominious launch of the Affordable Care Act’s (ACA) healthcare.gov website signaled the end of an era.
The years leading up to the passage of the ACA featured two pressing national health policy issues: covering more (or all) Americans with health insurance, and the cost (or value) of health care.
What should be the top priority? How should the goals be pursued? It was a vigorous debate and featured a first: every Republican running for president in 2008 had a comprehensive health care reform plan in the primary.
With the passage of the ACA, however, the die was cast. Despite some messaging (such as “it will bend the cost curve”), the ACA was a coverage-heavy reform that did nothing to alter the growth of costs.
Utilization Driving Costs
Roll the clock forward to 2024, and the top concern is no longer universal-coverage fantasies and Medicare for All but the cost of health care.
The National Health Expenditures (NHE) for 2023 show health care spending in the United States reached $4.9 trillion and increased by 7.5 percent in 2023, up from a rate of 4.6 percent in 2022 (see figure on this page).
That acceleration in health care spending growth reflected growth in nonprice factors such as the use and intensity of services (after notably slower growth in 2022). When adjusted for health care price inflation (as measured by the National Health Expenditure (NHE) deflator), real health care spending increased by 4.4 percent in 2023—a higher rate than the increase of 1.4 percent for such spending in 2022 and higher than the growth rate of real GDP, which was 2.9 percent in 2023.

More Out, Less In
That final fact is especially telling. The real growth rate of spending (4.4 percent) exceeds the growth rate of the income (2.9 percent) to finance that spending. This is a return to the bad old days that permitted NHE to grow from a small fraction of economic activity to nearly 20 percent of gross domestic product.
One of the basic features of the pressing U.S. fiscal problems is that Medicare grows at 7.0 percent, much faster than the growth of the economy, which dictates the growth of revenue. The cost trends indicate a near future in which health care could lie at the intersection of pressure on both federal and family finances.
Douglas Holtz-Eakin ([email protected]) is president of the American Action Forum. A version of this article appeared on the Daily Dish. Reprinted with permission.