Government says health spending to jump next year

Government says health spending to jump next year

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An employee at a money changer counts USD 100 bills in Manila on October 25, 2012. AFP PHOTO/NOEL CELIS (Photo credit should read NOEL CELIS/AFP/Getty Images)

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Associated Press

Posted on September 18, 2013 at 2:27 PM

Updated Wednesday, Sep 18 at 4:20 PM

WASHINGTON (AP) — The nation's health care spending will jump by 6.1 percent next year as the big coverage expansion in President Barack Obama's overhaul kicks in, government experts predicted Wednesday.

That's more than 2 percentage points higher than the growth rate forecast for this year, and compares with a growth rate that has hovered under 4 percent, historically low, for the past four years.

Much of the increase projected for next year is attributed to the new health care program, which is expected to provide insurance coverage to millions of currently uninsured Americans beginning Jan. 1.

Without it, the estimated growth would be 4.5 percent, according to the report Wednesday from Medicare's Office of the Actuary. The findings were published online by the journal Health Affairs.

Other factors driving up spending include an improving economy and the aging of the nation's population.

Over the longer term, the health care overhaul would only be a modest contributor to spending increases, the report said. From 2012 to 2022, the new law is projected to add about 0.1 percent to average annual health spending growth.

In all, Obama's plan will add $621 billion to health care spending over that 10-year period, while expanding coverage to some 30 million uninsured people, experts said.

Some 11 million people are expected to gain health insurance coverage in 2014, mostly through new state insurance markets the law sets up or through expanded eligibility for Medicaid, the federal-state insurance program for low-income people.

Medicaid enrollment alone is expected to increase by 8.7 million people next year.

Many of the newly insured are expected to be younger and healthier. They're expected to devote a larger share of their health care spending to prescription drugs and physician and clinical services and a smaller share to hospital spending.

Out-of-pocket spending for individuals and families is projected to fall 1.5 percent in 2014 because of the new coverage and lower cost-sharing for people with improved coverage.

The report said the recent low rates of spending growth are a persistent effect of the economic recession, which includes employers shifting more health care costs to employees, pressure on government budgets and consumers forgoing or delaying treatment.

National health spending is expected to grow at an average annual rate of 5.8 percent from 2012 to 2022, 1 percentage point higher than the growth rate for the overall economy in that period, the experts said. As a result, the share of gross domestic product devoted to health care is forecast to rise from 17.9 percent in 2011 to 19.9 percent by 2022, the report said.

The most significant one-time effects on spending of the coverage expansions under Obama's plan are expected to subside beginning in 2016.

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Online:

Health Affairs: http://content.healthaffairs.org/lookup/doi/10.1377/hlthaff.2013.0721

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