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Topics: Obamacare

More evidence of rising health care spending

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Beltway Confidential,Opinion,Philip Klein,Obamacare,Health Care,Spending

New evidence is suggesting that national health care costs are on the rise, a reality that would present new challenges for President Obama's health care law and the U.S. medical system.

As I wrote earlier this month, between 2009 and 2012, national health care spending grew at a historically low rate. Though Obama and many of his allies tried to credit the passage of the health care law for the slowdown, other analysts had argued that the broader weakness in the economy was the simpler explanation.

Given that people tend to tighten their budgets when the economy gets worse, it makes sense that they'd also cut back on medical expenses where possible. This explanation became even more plausible when economic data released last month showed an uptick in health spending in late 2013. Now another batch of data is pointing to more growth in the early months of 2014, as Obamacare's benefits begin to kick in.

According to government data analyzed by the Altarum Institute, national health spending spiked 6.7 percent in February 2014 compared with the same month a year earlier, representing "the highest rate since March 2007, just prior to the recession, which officially began in December 2007."

There are a number of caveats to apply to this data. To start, it's still subject to revision, as with all government economic data. It also is still too limited to represent enough of a trend. But if the data is confirmed by subsequent reports and does turn into a trend, it would have major implications for Obamacare.

Remember, the law is formally known as the "Patient Protection and Affordable Care Act." A big part of Obama's pitch in selling it was not merely that he was going to expand insurance coverage, but that he was going to get health care costs under control so that they could no longer impose an unsustainable burden on individuals, businesses, and the federal government.

But if the acceleration of health care costs ramps back up, then Obamacare — and the broader health care system — will have to undergo major changes.

For more on the new health care spending data, check out Jonathan Cohn at the New Republic.

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