Skip to content Skip to navigation

CMS Predicts Modest Cost Growth For 2012-2013, With Spike In 2014 From Expanded Health Coverage

June 12, 2012
by Mark Hagland
| Reprints
Economists at the Centers for Medicare and Medicaid Services see relatively modest Medicare program cost growth over the next two years

New estimates released on June 12 from the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS) project that aggregate health care spending in the United States will grow at an average annual rate of 5.7 percent for 2011 through 2021, or 0.9 percentage point faster than the expected growth in the gross domestic product (GDP). The health care share of GDP by 2021 is projected to rise to 19.6 percent, from its 2010 level of 17.9 percent.

By 2021, government spending at all levels for health care is projected to reach nearly 50 percent of total national health expenditures, with the federal government accounting for approximately two-thirds of that share, according to a new study published online in Health Affairs on June 12 and set to be published in the July print edition of that publication.

The projections reflect various factors that can affect health care spending, including an aging population, according to an analysis in Health Affairs by a group of healthcare economists led by Sean P. Keehan, a senior economist in the Office of the Actuary at CMS. Relatively slower economic growth is also expected to affect spending on health care, with modest growth in disposable personal incomes, insurance coverage, and employment rates all limiting expenditures through next year. "The recent recession and the modest economic recovery have played a role in our projection of near historic lows in health spending growth through 2013," says Sean Keehan, the lead author of the study. "However, other factors such as Medicare payment cuts under current law and the patent expirations of several top-selling brand-name drugs have led to projected health spending growth staying at about 4 percent during this period."

Keehan and his team of authors go on to say that "The major effects of the Affordable Care Act on overall spending levels are expected to be felt most acutely in 2014. The coverage expansions associated with the Affordable Care Act for Medicaid and private health insurance are expected to increase the growth rate for health spending to 7.4 percent in 2014, with notable increases in spending on physician services and prescription drugs by the newly insured. Throughout the latter half of the projection period, incomes are expected to be higher, and a large number of baby boomers are anticipated to be receiving coverage under Medicare. Among others, these factors are expected to drive health spending up around 2 percentage points faster than overall economic growth by 2020, consistent with trends in the United States for about the past 30 years."



Insurers to CBO: Consider Private Insurers’ Data in Evaluations of Telemedicine

Eleven private insurers, including Aetna, Humana and Anthem, are urging the Congressional Budget Office (CBO) to consider the experience of commercial insurers when evaluating the impact of telemedicine coverage in Medicare.

AHRQ Developing New Patient Safety Surveillance Tool

With the aim of improving patient safety monitoring, the Agency for Healthcare Research and Quality (AHRQ) within the U.S. Department of Health and Human Services (HHS) is currently developing and testing an improved patient safety surveillance system.

Gates Foundation Awards $210M to UW's Population Health Initiative

The Bill and Melinda Gates Foundation is awarding $210 million to Seattle-based University of Washington’s Population Health Initiative, with the funds going toward the construction of a new building to serve as the initiative’s hub.

AHA Offers Interoperability Standards Recommendations to ONC

The American Hospital Association (AHA) has offered feedback to the ONC on the agency’s draft Interoperability Standards Advisory (ISA) that it issued in August.

Survey: Healthcare Orgs Not Taking Mobile Security Seriously Enough

More than half (56 percent) of healthcare professionals believe their organization could be doing more to educate employees on HIPAA compliance and the rules around sharing protected health information.

Mount Sinai’s Research Arm Using Data Analytics to Address Health Inequities

The Arnhold Institute for Global Health at the Icahn School of Medicine at Mount Sinai is partnering with DigitalGlobe to create the Health Equity Atlas Initiative (ATLAS), a platform that standardizes and maps population data in order to generate insights that address health inequities.