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 The Centers for Medicare and Medicaid said it expects average annual
healthcare spending to grow by 5.7 percent from 2013 to 2023,
compared to 5.8 percent in last year's projections, which covered
the years 2012 to 2022.
The projected growth rate is well below the 7.2 percent annual
average between 1990 and 2008, CMS said.
The projections coincide with Congressional Budget Office estimates
released last week that show another $11 billion reduction in
projected spending for Medicare, the federal healthcare program for
the elderly, for the 2015-24 period. This reduction from projections
made in February contributes directly to lower federal deficits.
The CMS study projects both public and private healthcare outlays
and showed the overall total will make up a smaller portion of the
economy than previously thought in coming years. In 2023, it
estimated that healthcare spending will equal 19.3 percent of Gross
Domestic Product, compared with last year's projection of 19.9
percent for 2022. It made up 17.2 percent of GDP in 2012.
The spending growth rate for 2013 will be 3.6 percent, nearly at the
historic low since CMS started tracking health care spending in
1960.
For 2014, the spending growth will accelerate to 5.6 percent as more
people gain healthcare coverage under President Barack Obama's
health insurance reform law, largely through its expansion of
Medicaid, and because of an increase in economic growth. But this
will still be below last year's estimate of 6.1 percent growth for
2014.
"The major factor is the relationship between health spending and
economic growth," said Andrea Sisko, an economist in the CMS
actuarial division.
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Loss of jobs and associated healthcare benefits tend to discourage
healthcare utilization, she said, adding that employment has been
slow to recover. Another deterrent has been the increase in
healthcare plans that require beneficiaries to bear a greater
proportion of costs for doctor visits, procedures and prescription
drugs.
Medicare reimbursement rates also have been curtailed by the
"sequester" budget cuts and by the Affordable Care Act, and
prescription drug costs have eased because patents on a number of
major medications have expired in recent years, making cheaper
generic versions available.
But as the economy improves and more Baby Boomers retire and draw
benefits, spending growth is still expected to pick up, averaging
6.0 percent from 2015-23, CMS said.
(Reporting by David Lawder; Editing by Bernard Orr)
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