According to a report released today in Health Affairs by the CMS Office of the Actuary healthcare spending growth is projected to average 5.8% over the period 2014 through 2024. In the three decades leading up to 2008 the average annual growth rate was 9%.
So let’s see. Demographics will really begin to swell Medicare participation in the decade ahead. It is likely that more states will politically have to embrace Medicaid expansion. Diagnoses and treatment innovation is still being largely driven by private investment seeking high-risk returns. Industry consolidation on both the provider and insurer sides is eliminating market price competition. And we’re only going to see 6% annual cost increases they say . . . you buying it?
Here are some highlights from the CMS press release:
Spending in 2014 is projected at $3.1 trillion, or $9,695 per person, an increase of 5.5 percent over 2013. Prescription drug spending increased 12.6 percent but private health insurance increased at 5.4 percent, Medicare at 2.7 percent and Medicaid at 0.8 percent.
Medical price inflation was 1.4 percent, while hospital, and physician and clinical services increased at 1.4 and 0.5 percent, respectively.
Per-capita insurance premium growth in private health plans is projected to be at 2.8 percent in 2015 based upon the assumptions that there will be an increase in relatively healthier enrollees and a greater prevalence of high-deductible health plans offered by employers.
Is is estimated there will be 19.1 million new enrollees in Medicare over the next 11 years.
While per capita Medicaid spending is projected to have decreased by 0.8 percent in 2014 (owing to new enrollees being relatively healthier), overall spending is projected to have increased by 12.0 percent due to Medicaid expansion.
The rate of insurance coverage in the US is projected to increase from 86.0 percent to 92.4 over the next 11 years.
The full OACT report is available online via the CMS website.