Health care spending hit $3.6 trillion in 2018 due to ACA tax

National spending on health care is rising, fueled in part by the reinstatement of an Affordable Care Act tax on insurers, according to a new federal report.

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Total national health expenditures last year increased by 4.6 percent to $3.6 trillion last year, the Centers for Medicare and Medicaid Services said. The U.S. spent about $11.172 per person, and national health care spending accounted for about 17.7 percent of the total U.S. economy last year, compared with 17.9 percent in 2017. It was roughly the same as 2016.

By household, health care spending, which includes out-of-pocket spending, contributions to private health insurance premiums and contributions to Medicare through payroll taxes and premiums, also grew by 4.4 percent.

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Private businesses, meanwhile, shelled out $726.8 billion on health care, a 6.2 percent increase from the year-ago period. Most of that goes toward employers' contributions for insurance premiums. At 20 percent, it absorbed the second-largest shares of health care spending, preceded only by the federal government and households.

Overall, spending by Medicare, Medicaid and private health insurance grew faster because of the health insurance tax, an annual fee on all health insurers intended to help fund the estimated $1 trillion cost of the ACA. Congress suspended the tax in 2017 and 2019. It was expected to raise $14.3 billion in 2018, according to the Internal Revenue Service.

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“It was responsible for a significant portion of the rise we saw,” Micah Hartman, the report’s lead author, told The Wall Street Journal.

As baby boomers age, the pace of health care spending is only expected to grow. Health care’s share of the economy is projected to climb to 19.4 percent by 2027 from 17.9 percent in 2017, according to a previous CMS study cited by the Journal.

The number of uninsured Americans rose by 1 million for the second year in a row to 30.7 million in 2018. The rate of people without health insurance held steady under 10 percent.

The report could draw the ire of Democrats, who have criticized the Trump administration for its attacks on the ACA. The future of the Obama-era health law is in limbo as a panel of three federal appeals court judges weighs whether it’s unconstitutional after Republicans stripped it of the individual mandate in 2017.

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