More Uninsured People, Faster Growth in Health-Care Spending Due to ACA Tax, Report Says

Date : 12/05/2019 @ 9:29PM
Source : Dow Jones News

More Uninsured People, Faster Growth in Health-Care Spending Due to ACA Tax, Report Says

By Stephanie Armour 

More Americans are going without health coverage and the pace of spending on health care nationally is rising in part because of an Affordable Care Act tax on insurers, Trump administration officials said Thursday.

A federal report from actuaries at the Centers for Medicare and Medicaid Services revealed trends that are likely to further fuel the battle between Republicans and Democrats over how to slow health-care spending growth that has already put the U.S. far ahead of most comparable wealthy countries.

Overall, national health-care spending rose to $3.65 trillion in 2018, up 4.6% from 2017. The U.S. spent $11,172 per person, and national health-care spending accounted for 17.7% of the economy last year, compared with 17.9% in 2017.

The data indicate some notable shifts related to changes in insurance coverage, the price of drugs and legislative actions.

Retail prescription drug prices declined by 1% in 2018, the first drop since 1973. The decrease reflects a decline in generic drug prices and relatively slow growth in prices for brand-name drugs, officials said. President Trump has angered Democrats by taking credit for prescription-drug prices he says are falling, and the data may fuel further scrutiny over the effectiveness of administrative policies to spur greater use of generics.

The number of people without insurance rose by 1 million in 2018 for the second consecutive year, with 30.7 million individuals uninsured. Democrats have criticized Mr. Trump for his efforts to roll back the 2010 Obama-era health law that expanded coverage to an estimated 20 million people.

While the overall acceleration in national health-care spending wasn't that large relative to other years, an Affordable Care Act tax is being blamed for most of the increase. The tax, an annual fee on all health insurers, is among several imposed under the law to cover its estimated 10-year cost of more than $1 trillion.

The tax has been controversial, with consumer and industry groups saying it will raise premiums and hurt consumers. Congress suspended the tax in 2017 and 2019. It is slated to kick in again in 2020.

Federal officials on Thursday linked the tax to a rise in the net cost of private insurance, which includes factors such as insurers' costs for premium taxes and bills. The cost grew 15.3% last year to $164 billion, its fastest rate of increase in 15 years.

Officials said the growth in the net cost of insurance was also behind some of the growth in spending on Medicaid, a federal-state program for low-income and disabled people. Overall spending on the program increased 3% to about $598 billion in 2018.

The impact of the tax in 2018, when it was in effect, could provide a glimpse at its implications for future years and galvanize its opponents. A coalition of industry and consumer groups are lobbying for a two-year delay. The levy, known as the "HIT tax," is expected to generate $15.5 billion in 2020, according to the Internal Revenue Service.

Write to Stephanie Armour at


(END) Dow Jones Newswires

December 05, 2019 16:14 ET (21:14 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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