A Mixed Story on Health Care Spending


CORRECTION: My “corrected” chart is all wrong. Click here for both an explanation and the proper chart.


Katherine Hempstead of the Robert Wood Johnson Foundation is optimistic about the growth of health care spending:

The quarterly trend in overall health spending growth using the Altarum Health Spending Economic Indicators series shows a clear peak in Q1 2015 at 6.7 percent, with subsequent declines every quarter. Partial data for Q4 (October and November) show a spending growth rate of 5.2 percent. While overall spending growth in 2015 will clearly exceed that of 2014, a reduction appears to be underway.

As near as I can tell, this spending data hasn’t been adjusted for inflation. When you do that you get the chart at the bottom, which tells a different story. There was indeed a peak in the first quarter of 2015 followed by a sharp drop, but spending growth has gone up since then.

In the long term, I’m fairly optimistic about the trajectory of health care spending. As Hempstead says, it makes sense that we saw some large increases when Obamacare was first implemented, since it brought a lot of new people into the health care system. But after the first year or two, that will flatten out and long-term trends should continue to dominate.

That said, you still need to look at this stuff in real terms. And when you do that, we’re not quite seeing the steady downward march that Hempstead suggests.

UPDATE: I originally used overall CPI to adjust the health spending numbers, but it’s probably better to use just the medical component of CPI. I’ve modified the chart to reflect this.

MORE HARD-HITTING JOURNALISM

In 2014, before Donald Trump announced his run for president, we knew we had to do something different to address the fundamental challenge facing journalism: how hard-hitting reporting that can hold the powerful accountable can survive as the bottom falls out of the news business.

Being a nonprofit, we started planning The Moment for Mother Jones, a special campaign to raise $25 million for key investments to make Mother Jones the strongest watchdog it can be. Five years later, readers have stepped up and contributed an astonishing $23 million in gifts and future pledges. This is an incredible statement from the Mother Jones community in the face of huge threats—both economic and political—against the free press.

Read more about The Moment and see what we've been able to accomplish thanks to readers' incredible generosity so far, and please join them today. Your gift will be matched dollar for dollar, up to $500,000 total, during this critical moment for journalism.

We Recommend

Latest

Sign up for our newsletters

Subscribe and we'll send Mother Jones straight to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate

We have a new comment system! We are now using Coral, from Vox Media, for comments on all new articles. We'd love your feedback.