|
E-mail this page to a friend!
Rate of Growth Slows for Health Care Cost but
Doubles in Decade Ahead
Feb. 22, 2006 - Health care spending in the United
States is projected to grow 7.4 percent in 2005 and 7.3 percent in 2006
surpassing $2-trillion. In the next decade, however, this cost is
expected to double as the senior
 citizen
population booms, according to a report released today by the Centers
for Medicare and Medicaid Services (CMS).
The report was prepared by the CMS Office of the
Actuary and published on-line today by the journal Health Affairs.
Projections are updated each year based on the most
recent available data, which is currently 2004 data.
The 7.4 percent growth rate is 0.5 percentage
points less than the 7.9 percent growth observed in 2004 and represents
the third consecutive year of decelerating growth and is expected to
continue in 2006.
|
$ Millions |
Expense |
Private |
|
1965 |
42,272 |
31,690 |
|
1970 |
75,111 |
46,763 |
|
1975 |
133,557 |
77,225 |
|
1980 |
254,872 |
147,572 |
|
1985 |
441,880 |
262,523 |
|
1990 |
717,342 |
427,318 |
|
1995 |
1,020,438 |
553,815 |
|
2000 |
1,358,510 |
756,343 |
|
2005 |
2,016,044 |
1,101,434 |
|
2010 |
2,879,425 |
1,544,706 |
|
2015 |
4,031,671 |
2,116,403 |
Underlying the slowdown in national health spending
in 2005 and 2006 is an expected drop in personal health care spending.
Influenced by legislated Medicare payment adjustments that are to be
implemented in 2007, growth in personal health care spending is
projected to fall to 7.0 percent that year. In 2008, growth is expected
to rebound to 7.5 percent, but then gradually slow over the remainder of
the 10-year projection.
Over the coming decade, with the aging of the
population and changes in medical technology and utilization as the main
contributing factors, national health expenditures are expected to
double, growing an average rate of 7.2 percent per year.
| |
Related Stories |
|
| |
Analysts: Health Care Costs to Keep
Rising
By KEVIN
FREKING, Associated Press Writer
WASHINGTON -
Within a decade, an aging America will spend one of every five
dollars on health care, according to government analysts who see
no end to increases in the cost of going to the doctor and
taking medicine.
The nation's
total health care bill by 2015: more than $4 trillion. Consumers
will foot about half the bill, the government the rest.
Hospital
costs will rise more quickly than previously anticipated,
reflecting a construction boom for urban hospitals. Meanwhile,
drug costs are expected to be lower because of a greater
reliance on generics, and because insurers administering the new
Medicare drug benefit were able to negotiate steeper discounts
than previously anticipated.
Read more
Read more on
Medicare |
|
As a result, the health share of Gross Domestic
Product (GDP), 16 percent in 2004, is expected to climb to 20 percent by
2015.
Personal health care spending by the private sector
is projected to decelerate slightly in 2005 to 8.0 percent from 8.4
percent in 2004.
This continuation of relatively strong growth
occurs predominantly due to Medicare spending growth, reflecting changes
associated with the Medicare Modernization Act of 2003 (MMA) other than
the new Medicare Part D prescription drug benefit.
These include increased payments to rural
hospitals, the postponement of scheduled Medicare therapy caps and a
physician update payment in 2005 of 1.5 percent. In 2006, with the
introduction of prescription drug coverage in Medicare (Part D) and a
slowdown
in private and out-of-pocket spending growth,
public spending growth is projected to have a one-time acceleration to
11.8 percent. Over the remainder of the period, growth is expected to
range between 6.5 and 7.9 percent.
Private personal health care spending growth will
grow more slowly, decelerating from 7.5 percent in 2004 to 7.2 percent
in 2005 due to the anticipated slowdown in medical price inflation.
Further, a shift in drug payments away from private insurance and into
Medicare due to the implementation of Medicare Part D will cause growth
to decelerate sharply to 3.9 percent in 2006. However, growth is
expected to rebound and peak at 7.7 percent by 2008, and then decelerate
through 2015.
The rate of increase in private health insurance
premiums is also expected to slow for the third consecutive year,
reaching 6.8 percent in 2005. This deceleration of 1.6 percentage
points is driven by slower growth in projected medical benefits per
enrollee and also by the underwriting cycle.
Out-of-pocket spending growth is expected to remain
essentially flat in 2005, before decreasing substantially due to
Medicare Part D coverage in 2006. The out-of-pocket share of personal
health care spending is expected to decline from 15.1 percent in 2004 to
12.6 percent by 2015 as growth in public spending and private health
insurance spending continues to outpace growth in out-of-pocket
spending.
| |
Reactions |
|
| |
Paul Ginsburg, president of the
Center for Studying Health System Change,
said, "When spending on health care goes up faster than
earnings, lower-paid people are priced out of the health
insurance market" (Miami Herald, 2/22). Ginsburg
also said that the report was "optimistic" because the authors
are "only following current laws on the books, which means they
assume there will be continued physician payment cuts in
Medicare," adding, "But people don't expect that to happen" (Washington
Times, 2/22).
Paul Fronstin, an economist at the
Employee Benefit Research Institute,
said, "It's hard to see where we will see sustained savings" in
health care (Los Angeles Times, 2/22).
Stephen Heffler, director of NHSG,
said that the short-term estimates in the report are "relatively
accurate," although the long-term estimates could change as a
result of potential revisions to the law or the state of the
economy. In addition, Heffler cited the Medicare prescription
drug benefit as the "poster child of difficulty" for long-term
estimates (Washington Times, 2/22).
Read more at KaiserNet.org -
Click |
|
After slowing slightly from 8.9 percent in 2004 to
8.6 percent in 2005, Medicare growth is expected to have a one-time
increase of 25.2 percent when the new Medicare prescription drug
coverage begins. This is significantly less growth than had been
forecast previously, as a result of new projections of the Medicare drug
benefit budget cost declining by 20 percent for 2006. Thereafter,
Medicare growth is expected to slow to 5.4 percent in 2007 and then
accelerate to 8.8 percent by the end of the projection period.
This projected growth pattern reflects several
factors, including multiple years of projected reductions in physician
payments followed by a few years of positive payment updates under the
Sustainable Growth Rate system, an enrollment shift from traditional
fee-for-service Medicare to managed care, and increased enrollment in
Medicare as the Baby Boom generation becomes eligible for the program.
Combined federal and state Medicaid spending growth
is also expected to slow, for the fourth consecutive year, to 7.7
percent. Although Medicaid enrollment growth is expected to decelerate
in 2005 to 2.1 percent growth from 4.2 percent in 2004, per enrollee
spending is expected to increase 2.8 percent in 2005.
Hospital spending growth for 2005 is projected at
7.9 percent, marking the second consecutive year growth in this sector
is expected to outpace growth in total personal health care.
Private payer spending growth is expected to slow
1.1 percentage points to 8.5 percent in 2005 due to an expected slowdown
in hospital price growth. In 2006, growth rebounds to 9.0 percent and
then moderates during the remainder of the period with an average of 7.9
percent. Public payer spending growth is expected to slow in 2005 to
7.5 percent and to 5.5 percent by 2007, due to legislative adjustments
to Medicare managed care payments and other factors. Growth is expected
to subsequently accelerate to 6.8 percent by 2015.
The Medicare Part D prescription drug benefit is
expected to slightly lower overall growth in drug spending, despite
substantially expanding coverage and reducing out-of-pocket costs for
beneficiaries. For 2007 through 2015, drug spending growth is projected
to remain in the range of 8.0 to 8.4 percent.
Home health spending growth is expected to remain
strong in 2005 at 13.2 percent, following 13.3 percent growth in 2004.
Public payers, particularly Medicare, drive this trend. While growth of
15.3 percent for Medicare home health services in 2005 would mark the
fifth consecutive year of double digit growth, we expect that trend to
moderate and average 6.9 percent from 2007-2015.
Growth in home health services provided by Medicaid
is expected to grow to 18.6 percent in 2005, and grow at an average rate
of 10.9 percent between 2007 and 2015.
The health care spending projection data can be
found on the CMS web site at
http://www.cms.hhs.gov/NationalHealthExpendData/03_NationalHealthAccountsProjected.asp.
Click here to Search SeniorJournal.com for more on
this subject
Click to More Senior News on the
Front Page
Copyright: SeniorJournal.com |
