WASHINGTON – The current trend of low growth in health care spending is expected to end in 2016 as more patients gain insurance coverage and the U.S. population continues to age, according to an analysis from the Centers for Medicare & Medicaid Services.
For the fifth year in a row, overall health care spending in 2013 grew less than 4% – significantly lower than historical growth rates, Andrea Sisko, an economist in the Office of the Actuary at the CMS, said at a press briefing. Spending growth was down, in part, because of sequestration’s 2% Medicare cut and because Medicare beneficiaries used fewer physician and hospital services. Lingering effects of the 2009 recession also meant that privately insured patients spent less on health care.
Alicia Ault/Frontline Medical News
CMS Economist Andrea Sisko
The Affordable Care Act had some impact on the growth in health spending in 2013, Ms. Sisko said. The ACA’s temporary increase in Medicaid primary care payments helped to almost double the growth in that program’s spending. Overall Medicaid spending grew almost 7% in 2013 (vs. 3% in 2012); physician payment increases by the states and enhanced benefits contributed to the overall spending growth. The analysis was published Sept. 3 in the journal Health Affairs (doi: 10.1377/hlthaff.2014.0560).
The change in Medicaid was one of few areas where the economists definitively could say that the ACA either fueled or restrained spending growth.
"We are no longer estimating or quantifying the impacts of the Affordable Care Act on national health spending," said Ms. Sisko, who noted that after 4 years, it has become difficult to tease out the law’s effects.
Overall spending on physician services grew 3.3% in 2013, but could grow by almost 6% in 2014. After a slight decline in 2015, growth is expected to be about 6% yearly from 2016 to 2023, according to the analysis.
Future growth in spending on physician services will come as more Americans gain health insurance coverage. The projected dip in 2015 is tied to the end of the temporary Medicaid pay boost, which ends in December2014. For 2016-2023, physician spending is expected to rebound as more U.S. residents become eligible for Medicare.
Spending for physician services is expected to make up about 20% of U.S. health care spending through 2023, with hospitals consuming 32% and prescription drugs 9%.
While future health care spending growth is expected to slightly outpace economic growth (6% for health care spending vs. 5% for overall spending), that growth rate is still lower than the 7% yearly increases seen in the 1990s and through the mid-2000s, Ms. Sisko said. The growth rates will be lower in part because they will be based on a historically low baseline of the last 4-5 years, Ms. Sisko added.
Drug costs, for instance, will not have the double-digit growth seen in the late 1990s, said coauthor Sean Keehan, also an economist at the CMS Office of the Actuary. Unlike in the 1990s, payers now seem to have more leverage to negotiate lower rates from physicians and hospitals, and thus keep costs and spending down.
The physician spending figures assume that Congress will override the fee cuts mandated by the Sustainable Growth Rate formula and instead keep fees flat in 2015, and then give a 0.6% increase from 2016 to 2023. They also assume that the budget sequestration will continue.
On Twitter @aliciaault