The lingering effects of the economic recession and a modest growth in personal income are expected to continue to constrain healthcare spending through 2013. But look for a jump in spending as more provisions of the Patient Protection and Affordable Care Act are enacted. Those are among the findings of the latest national health expenditure projections released Tuesday by the Office of the Actuary at the Centers for Medicare & Medicaid Services.
U.S. spending on healthcare is expected to increase by an average of only 4% between 2011 and 2013, which is slightly ahead of the historically low 3.8% experienced in 2009.
Total national health expenditures for 2013 are estimated at $2.9 trillion.
Although the spending increase reflects some implementation of the PPACA, the impact of the healthcare reform law is expected to be felt more fully in 2014 when spending growth is expected to increase by 7.4% to $3.1 trillion.
That growth will be driven by the increased demand for healthcare services and prescription drugs as an estimated 30 million people gain access to insurance coverage under provisions of the ACA, explained Sean P. Keehan, a senior economist with the Office of the Actuary, during a press conference to announce the results.
As the ACA becomes more embedded between 2015 and 2021, however, projections call for healthcare spending to grow at a somewhat slower rate?an average rate 6.2% per year. By that time the economy is expected to have rebound and more baby boomers will have shifted to the Medicare rolls.
The report notes that Medicare spending growth will be restrained by the ACA "through slower growth in both FFS and Medicare Advantage payment rates, the sustainable growth rate formula, and the sequestration process."
Keehan said it "remains to be seen" if efforts by insurers to slow healthcare spending through high deductible health plans or narrow provider networks will help slow healthcare spending.
Without the increased utilization fueled by healthcare reform, spending is projected to increase by only 5.3% in 2014.
The fate of PPACA stands in the balance awaiting a Supreme Court decision expected later this month that could strike down all or part of the law. Keehan and his team of economists and actuaries said the projections could be affected by changes in the healthcare reform law, as well as in the economy.
As a percentage of the gross domestic product, CMS projects national health spending to grow to 19.6% in 2021, up from 17.9% in 2010. In addition, federal, state and local spending is projected to account for almost 50% of national health spending versus 46% in 2011.
The CMS health spending projections appear in Health Affairs.
Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.
