CMS: Healthcare spending growth to pick up steam

National healthcare spending will remain slow throughout this year, but thanks to a recovering economy, an aging population, and coverage expansions under the Affordable Care Act, it will rise faster in 2014 and beyond, according to a Wednesday report from the Centers for Medicare & Medicaid Services Office of the Actuary.

The report concludes national health spending will surpass the current 4 percent growth rate and will grow at an average annual rate of 5.8 percent between 2012 and 2022. Health spending will total $2.4 trillion by the end of that decade, with federal, state, and local governments responsible for 49 percent of those costs.

Moreover, over the next decade, healthcare spending rates for hospital, prescription drug and Medicare spending will fall below their peak rates in the previous decade.

"We are on the right track to controlling healthcare costs, thanks in part to the Affordable Care Act," CMS Administrator Marilyn Tavenner said yesterday in the report announcement. "We have identified several areas where our reforms to control costs are making progress and we must build on those efforts in the years ahead."

The Actuary report expects Medicare spending growth to annually increase 7.4 percent between 2015 and 2022, well below the previous decade's 9.3 percent growth rate.

During that time period, hospital spending growth will average 6.3 percent per year, while prescription drug spending growth will average 6.5 percent--lower than 8.6 percent prescription drug spending growth rate between 2000 and 2009, according to the report.

While the struggling economy has played a big role in driving down healthcare spending, it is up for debate whether President Obama's healthcare reform provisions have influenced the spending slowdown, the Huffington Post reported.

"While there certainly are a lot of factors affecting the health sector now and over the last few years, we will partake in a little more of a cautious approach in whether these changes are structural and permanent," Stephen Heffler, director of the National Health Statistics Group at the Office of the Actuary, said yesterday during a news conference, the Huffington Post noted.

"Over a long-run, historical period, there is a very tight relationship between economic growth and health spending growth, and until we see evidence that that relationship has been broken, it's very difficult for us to conclude that something structural has occurred," he said.

To learn more:
- read the Health Affairs study abstract
- here's the CMS announcement
- check out the Huffington Post article

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