U.S. Health Spending Projections for 2014 to 2019 Drop by 11%
For the study, researchers used CMS data on projected spending (Mangan, CNBC, 4/8). The study was funded by the Robert Wood Johnson Foundation (Shinkman, FierceHealthFinance, 4/8).
In February 2010, the federal government predicted health spending between 2014 and 2019 would total $23.6 trillion.
Updated estimates released in October 2014 put health spending for the same period at about $21 trillion (Holahan/McMorrow, Urban Institute study, April 2015).The latest predictions represent about an 11% decline in spending (CNBC, 4/8).
Compared with February 2010 projections, the researchers found that:
- Medicare is expected to spend $384 billion less;
- Medicaid is projected to spend $927 billion less; and
- Private health insurance expenditures are projected to be $688 billion lower (FierceHealthFinance, 4/8).
Reasons for Decline
The researchers noted specific reasons for the decline in spending projections, including:
- The recent recession and a period of slow income growth;
- The proliferation of high-deductible plans; and
- Cost constraints for state Medicaid programs and Medicare policies related to the Affordable Care Act (CNBC, 4/8)
The researchers wrote that "much of the decline in projected spending for the 2014-2019 period seems to be related to the historically low growth in actual health spending that began with the recession in 2008 and has continued to the present" (FierceHealthFinance, 4/8).
The researchers added that "it is also likely the [ACA] contributed" to the decline, "though how much is impossible to estimate." However, they wrote, "While the exact impact of the ACA cannot be determined, it is clear that the nation has successfully expanded [health] coverage, and is now expected to spend considerably less than anticipated even before the law was enacted" (CNBC, 4/8)
Study Contradicts Recent Estimates
According to FierceHealthFinance, the study contradicts recent reports that health care spending has increased in recent months. For example, an Altarum Institute study recently noted spending increased by more than 5% from November 2013 to November 2014, though it suggested the trend could be temporary (FierceHealthFinance, 4/8).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.