Healthcare spending in the United States will increase by an average of 5.8 percent during 2014 to 2024, according to a new report from the Centers for Medicare & Medicaid Services’ (CMS) Office of the Actuary (OACT).
That growth rate was substantially lower than the 9 percent average rate seen in the prior three decades before 2008, according to NHE Projections 2014-2024.
“Growth in overall health spending remains modest even as more Americans are covered, many for the first time,” said CMS Acting Administrator Andy Slavitt. “Per-capita spending and medical inflation are all at historically very modest levels. We cannot be complacent. 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.”
The report projects that, when completely totaled, 2014 will have seen U.S. health spending reach $3.1 trillion, or $9,695 per person, and will have increased by 5.5 percent from the previous year. The key drivers for this growth were that millions of Americans gained health insurance coverage and that expensive specialty drugs hit the market, according to the report. Prescription drug spending alone increased 12.6 percent in 2014, the highest growth since 2002.
That said, 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 key 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 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 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.