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CMS: National health spending projections juggle expanded coverage, high-cost drugs

July 28, 2015
by Pamela Tabar, Editor-in-Chief
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National health expenditures are expected to rise to 5.8 percent during 2014-2024, according to a financial report released today by the Centers for Medicare & Medicaid Services (CMS) Office of the Actuary.

The projected increase, attributable in part to expanded health coverage under the affordable Care Act and a rising older population, is being held somewhat in check by greater risk sharing and moderate recovery in the U.S. economy, the report noted.

Another factor is the emergence of high-cost specialty drugs to the insurance mix:  “...partly as a result of expensive new treatments for hepatitis C, prescription drug spending is projected to have risen sharply to 12.6 percent in 2014, reaching its highest rate of growth since 2002,” the report notes.  “As a result, the projected acceleration in all other health expenditures (excluding prescription drug spending) is more modest than that in overall health spending: 4.8 percent in 2014, compared to 3.7 percent in 2013. In 2015 the health spending growth rate is expected to decelerate slightly to 5.3 percent, as the effects of the coverage expansions moderate and drug spending growth slows. “

The current projections for national healthcare spending are far lower than the 9 percent average spending growth rate that occurred during the three-decade span prior to 2008, the report notes. The average increase rate during the recent U.S. recession (2008 through 2013) was about 4 percent.

“Growth in overall health spending remains modest even as more Americans are covered, many for the first time. Per-capita spending and medical inflation are all at historically very modest levels,” said CMS Acting Administrator Andy Slavitt. “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.”

An additional 19 million beneficiaries are expected to enroll in Medicare by 2024, as the rest of the baby boomer generation reaches age 65.