The Office of Actuary for the Centers for Medicare and Medicaid services has published its latest ten year projection for health spending in Health Affairs. (HA Article) Although growth in spending has declined in the last few years, the projections show an uptick in future years, meaning that spending has and will continue to increase at a rate faster than either general inflation or GDP growth. For 2013, growth is estimated to be 4%, but in 2014 it will be 6.1%, largely due to implementation of the “reform” law (wait, that can’t be right, the administration promised us it would lower costs!). Medicaid spending will grow by 12.2% and private health insurance by 7.7%, while out of pocket spending declines by 1.5%, due to more people having coverage. The reform law accounts for 1.6% excess spending growth or about $50 billion. On a per capita basis, 5% or greater growth is expected during the projection period and during the entire period is higher than GDP per capita increases. Most components of health care–hospital, physician, drugs–are expected to show relatively similar growth rates. Government administration spending, not surprisingly, will show a significantly higher rate of increase. From 2015 on, Medicare spending is expected to accelerate by over 7% a year, due to more beneficiaries and the aging of beneficiaries, which tends to increase costs. Medicaid spending will also grow dramatically during the time period, due to the reform law expansion of eligibility. Although the growth rate is not as great, private insurance coverage spending will also increase, again largely due to coverage expansions. While the projection is for slower out of pocket spending increases, the very rapid spread of defined contribution and high-deductible plans makes this questionable. Consumers look like the big losers in reform. What is fairly clear is that health spending growth will continue to be a major budgetary and fiscal problem that must be addressed with a real reform.
✅ Subscribe via Email
About this Blog
The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry. Mr. Roche is available to assist health care companies through consulting arrangements through Roche Consulting, LLC and may be reached at [email protected].
Healthy Skeptic Podcast
This is an outstanding report on total global drug spending and trends, with projections out to 2025. It helps you understand this important area of health care, which does much...
June 1, 2021
MedPAC 2019 Report to Congress
June 18, 2019
More money pouring into young health care companies as Dispatch Health gains $330 million in new capital to deliver high acuity health care in a patient’s home, rather than a...
November 30, 2022
A lot of money is invested in health care startups and growth companies, since health care is 20% of the economy, but the returns aren’t always good. Here is another...
November 1, 2022
HealthJoy delights investors by garnering $60 million in mindless new capital to support its benefits navigation tool. Another sign of too much capital still floating around out there.
November 1, 2022
Access ACO Care Management Chronic Disease Comparative Effectiveness Consumer Directed Health Consumers Devices Disease Management Drugs EHRs Elder Care End-of-Life Care FDA Financings Genomics Government Health Care Costs Health Care Quality Health Care Reform Health Insurance Health Insurance Exchange HIT HomeCare Hospital Hospital Readmissions Legislation M&A Malpractice Meaningful Use Medicaid Medical Care Medicare Medicare Advantage Mobile Pay For Performance Pharmaceutical Physicians Providers Regulation Repealing Reform Telehealth Telemedicine Wellness and Prevention Workplace