Unexpectedly Intriguing!
October 20, 2015

Previously, in visualizing the data for how Americans have spent their money in each year since 1984, we noted that spending for health care, or really, health insurance and other medical expenses, saw a significant uptick in 2014, thanks to the Affordable Care Act, whose government-run health care "marketplaces" went into effect that year.

We thought we'd take a closer look at that remarkable increase today. First, let's directly compare the trends for the average amount of money that Americans spent on health care and on entertainment-related expenses in each year from 1984 through 2014.

Health Care and Entertainment as Percentage of Average Annual Total Consumer Expenditures per Consumer Unit, 1984-2014

The reason we're comparing these two expenditure categories is because in the years from 1984 through 2008, health care and entertainment represented approximately equal shares of the average annual total expenditures of American households, as both follow roughly the same general trajectory.

But after 2008, things begin to change, which we see when we break down the major categories of health care and entertainment into their subcategories. The chart below shows the dollar value change in each of the subcategories that make up these major expenditure categories with respect to the base year of 2008.

What we first find is that the amount of spending for each subcategory of the health care and entertainment expenditure categories holds fairly steady through 2010, where all the dollar amount spent each year are within $200 of their 2008 level.

What we next observe is that after 2010, the amount of money that Americans spend on the health insurance subcategory of health care expenditures begins to grow exponentially, where all the other kinds of spending, including for actual medical care, medical equipment, and medicine, not to mention all the various entertainment-related spending subcategories, are otherwise little changed - all are within $200 of their 2008 levels.

But American households through 2014 are spending over $1,200 more on health insurance than they were before 2008, as its cost curve has been bent upward.

The reason why is not difficult to determine. The passage of the Affordable Care Act, which is perhaps more popularly better known as "Obamacare", mandated that all Americans either buy costly health insurance or else pay higher income taxes, for which the latter option for most Americans, would represent a more affordable option.

But for those Americans who chose to buy health insurance after it was mandated, who are spending $1,215 more on average in health insurance in 2014 than they were in 2008, we get a sense of just how much more costly that option is.

And when you consider that the average total expenditures of American households in 2014 is $53,495, which is $3,009 higher than it was in the recession year of 2008, we find that the federal government mandated increase in personal health insurance spending accounts has claimed over 40% of the gain in spending money that Americans have otherwise realized as the U.S. economy has slowly recovered.

Which is to say that thanks to Obamacare, through 2014, average Americans are only benefitting from 60% of whatever economic recovery has occurred. The rest of the benefit has gone to the Obama administration's crony coalition of health care firms who were the primary beneficiaries of the Affordable Care Act.

If you don't believe us, just ask their investors, who wouldn't have done anywhere near as well if Americans had not been required by law to buy health insurance instead of whatever else they might otherwise have chosen to buy.

Data Sources

U.S. Bureau of Labor Statistics. Consumer Expenditure Survey. Multiyear Tables. [PDF Documents: 1984-1991, 1992-1999, 2000-2005, 2006-2012, 2013-2014]. Reference URL: http://www.bls.gov/cex/csxmulti.htm. Accessed 18 October 2015.

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