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U.S. Government Releases Healthcare Spending Forecast for 2014 – 2024

Windsor Mill, MD, July 29, 2015 ― According to a report published in Health Affairs authored by the Centers for Medicare & Medicaid Services’ (CMS) Office of the Actuary (OACT), health spending growth in the United States is projected to average 5.8 percent for 2014–24.

This growth reflects the Affordable Care Act’s coverage expansions, faster economic growth, and population aging.  Recent historically low growth rates in the use of medical goods and services, as well as medical prices, are expected to gradually increase.

However, in part because of the impact of continued cost-sharing increases that are anticipated among health plans, the acceleration of these growth rates is expected to be modest.

The health share of US gross domestic product is projected to rise from 17.4 percent in 2013 to 19.6 percent in 2024.

The authors noted that this rate of growth is still substantially lower than the 9 percent average rate seen in the three decades before 2008.

“Growth in overall health spending remains modest even as more Americans are covered, many for the first time. Per-capita spending and medical inflation are all at historically very modest levels,” said CMS Acting Administrator Andy Slavitt.

“We cannot be complacent,” Slavitt said.  “The task ahead for all of us is to keep people healthier while spending smarter across all categories of care delivery so that we can sustain these results.”

In 2014, health spending in the United States is projected to have reached $3.1 trillion, or $9,695 per person, and to have increased by 5.5 percent from the previous year as millions gained health insurance coverage and as new expensive specialty drugs hit the market.

Prescription drug spending alone increased 12.6 percent in 2014, the highest growth since 2002.

While more people are getting coverage, annual growth in per-enrollee expenditures in 2014 for private health insurance (5.4 percent), Medicare (2.7 percent) and Medicaid (-0.8 percent) remained slow in historical terms.

Other findings from the report:

  • Even with an increased number of people getting health coverage in 2014, medical price inflation was 1.4 percent.  Hospital, and physician and clinical services, which make up the largest portions of medical prices, also increased slowly at a 1.4 and 0.5 percent, respectively.
  • Per-capita premium growth in private health plans is projected to slow to 2.8 percent in 2015 reflecting the expectation of somewhat healthier Marketplace enrollees and the increasing prevalence of high-deductible health plans offered by employers.  The authors projected that per-capita premium growth would remain below 6 percent through the end of the projection period (2024).
  • Approximately 19.1 million additional people are expected to enroll in Medicare over the next 11 years as more members of the Baby Boom generation reach the Medicare eligibility age.
  • Medicaid:  In 2014, per capita Medicaid spending is projected to have decreased by 0.8 percent as the newly enrolled are expected to be somewhat healthier than those who were enrolled previously.  Overall spending, however, is projected to have increased by 12.0 percent in 2014 as a result of a 12.9-percent increase in enrollment related to the ACA coverage expansion.
  • While the newly enrolled Medicaid adult population is projected to cost more than adults who were enrolled in the program in 2013, the authors expect that per-enrollee costs will fall below the costs of other adults after pent up demand for medical care is satisfied.
  • The insured rate is expected to rise from 86.0 percent to 92.4 percent as the number of uninsured persons is projected to fall by 18 million over the next 11 years.
  • With increases in coverage, the share of health expenses that Americans pay out-of-pocket is projected to decline from 11.6 percent in 2013 to 10.0 percent in 2024.

The full OACT report can be accessed here.

The Health Affairs article about the study can be accessed here.