The Promise – and Perils – of Increasing Healthcare Spending

Healthcare spending is up, according to a recent New York Times article. The annual pace of spending growth on healthcare increased 5.6 percent in the fourth quarter of 2013, according to the Times. A report from IMS, a health care data and analytics firm, “found the use of the health care system increasing broadly in 2013.”

What’s behind the surge? One reason may be an economy on the mend. Another involves expanded health coverage. President Obama has announced that 8 million people have signed up for insurance coverage, Medicare costs per person have nearly stopped growing, and the estimated costs involved with the Affordable Care Act will be cheaper than originally projected.

But what will it mean for the industry? Some analysts and healthcare experts think this could lead to an increased demand on procedures from Americans, which could in turn lead to insurers raising premiums, according to the Times article.

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.

For the full article, visit: http://www.nytimes.com/2014/04/19/business/economy/health-care-spendings-recent-surge-stirs-unease.html?_r=0