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BREAKING NEWS: CMS Releases Spending Numbers: Medicare Spending Slows Considerably

September 18, 2013
by Mark Hagland
| Reprints
CMS announces Medicare spending results, noting the impact of the ACA on the slowing of costs

On Sep. 18, the federal Centers for Medicare & Medicaid Services (CMS) announced the most recent statistics on healthcare spending, with the agency noting that the first phases of implementation of the Affordable Care Act (ACA) slowed Medicare spending in 2012.

The report, titled “ National Health Expenditure Projections, 2012-22: Slow Growth Until Coverage Expands And Economy Improves,” cited a number of developments around spending, including the following:

> “Medicare spending growth has slowed. Medicare spending growth is estimated to have slowed to 4.6 percent in 2012, down from 6.2 percent in 2011, for a total of $579.9 billion. While increases in the number of Medicare enrollees, utilization and input prices will lead to an annual increase of 7.4 percent between 2015 and 2022, according to the report, it will be well below the previous decade’s 9.3 percent rate of growth, as the Affordable Care Act constrains fee-for-service and private plan payment growth.”

> “Out-of-pocket spending will be lower as people have more affordable coverage. By 2022, the share of total health spending attributable to out-of-pocket spending is projected to fall from 11.4 percent in 2012 to 9.1 percent, largely as a result of expanded insurance coverage through Medicaid and the Marketplaces.”

> “Low growth in hospital spending. For the third consecutive year, spending increases on hospital services are projected to be below five percent. For 2015 to 2022, growth in total hospital spending is projected to average 6.3 percent per year. Over this period, hospital spending is impacted by a number of factors, including increases in spending among the newly covered, improvements in the economy that are expected to lead to more use of services, aging of the US population, and Medicare hospital payment update reductions that have been cumulatively impacting spending since 2012.”

> “Physician and clinical services spending has remained low compared to previous years. Spending on physician and clinical services is estimated to have grown 4.6 percent in 2012, compared to 4.3 percent in 2011. The Actuary’s office projects that physician and clinical services spending will rise to 7.1 percent in 2014, when more Americans will have health insurance and utilizae physician services. These projections do not take into account Medicare physician payment cuts under the Sustainable Rate formula, which—if not overridden by Congress—would restrain growth in spending for physicians’ services to 4.7 percent.”

The report also found that prescription drug spending has been falling moderately, while Medicaid spending can be expected to fall in 2014.

The full report is available in Health Affairs, at:





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