September 3rd, 2014
Each year, Health Affairs publishes national health spending projections for the coming decade by authors at the Centers for Medicare and Medicaid Services Office of the Actuary (OACT). The articles provide important documentation of past trends and insight about future spending, using transparent, vetted assumptions.
In this year’s study, Andrea Sisko and coauthors reveal that the recent slowdown in health care spending growth has continued. Specifically, the authors report that national health care spending in 2013 is predicted to have increased by only 3.6 percent — the fifth consecutive year of spending growth below 4 percent. [Editor's note: Health Affairs also publishes annual retrospective health spending reports from OACT -- the journal expects to publish OACT's final numbers for 2013 spending in December.]
When interpreting the data, it is important to distinguish between the spending growth driven by increased spending per beneficiary and growth driven by increases in the number of beneficiaries. This is particularly relevant for Medicare (which is experiencing an influx in baby boomers) and Medicaid (which is experiencing Affordable Care Act (ACA) driven enrollment growth). Certainly, aggregate spending is an important statistic. The budgetary implications of rapid Medicare spending growth due to growth in the number of beneficiaries are similar to the implication of spending growth driven by growth in spending per beneficiary.
Yet the normative interpretation of spending growth will depend dramatically on the cause. We should celebrate aging baby boomers, increases in longevity and wellbeing. Similarly, higher Medicaid enrollment was the intended outcome of the ACA and, at least in many circles, is considered a good thing (relative to growth in the number of uninsured). Of course, such an increase in enrollment creates pressure on public budgets.Read the rest of this entry »