Access Equals Demand; Health Costs Will Be Up 6% A Year Next Decade

Editor's Choice
Main Category: Health Insurance / Medical Insurance
Also Included In: Medicare / Medicaid / SCHIP
Article Date: 28 Jul 2011 - 11:00 PDT


Healthcare for all may be a good thing, but spending on staying sound will grow almost 6% each year through 2020 according to experts. Researchers estimate that doctor visits, clinical services and prescription drugs will be some of the largest growth areas, because of the comparably young age of the newly insured population.

The increase is partly due to a percentage of the 30 million people gaining health insurance through President Barack Obama's healthcare overhaul joining government programs. According to the new report, the average annual growth in national health spending is expected to be 5.8%, or 0.1% point higher than it would be without the Affordable Care Act, outpacing annual GDP growth.

Sean Keehan, an economist at the government's Centers for Medicare and Medicaid Services (CMS) said:

"We are projecting a decline in the out-of-pocket share [for consumers], but that doesn't mean that the consumer's burden is going to be substantially reduced. Especially since we're projecting health spending to grow at a faster rate than economic growth and disposable personal incomes."

The largest increase in healthcare spending in a single year is expected in 2014, when CMS forecasts a rise of 8.3 percent as much of the new U.S. health law is implemented. The law's provisions include introducing state-based insurance exchanges and increased access to the government's Medicaid insurance plan for the poor.

For 2010, the researchers estimated health spending grew at a historically low rate of 3.9% to $2.6 trillion. They attributed this to a weak economy that has led many consumers to delay medical treatment.

The report estimated spending growth will average 6.2% annually from 2015 through 2020.

Large employers with low-wage employees are expected to stop offering health insurance in 2014. An estimated 13 million employees will then likely seek insurance in the new exchanges or by enrolling in Medicaid.

The relatively new law puts in place comprehensive health insurance reforms that will roll out over four years and beyond, with most changes taking place by 2014. The adjustments are many, and the public still has questions as they attempt to decipher the nuances of each item, and how it affects themselves and their families. Health insurance agencies will make the most changes to their systems, but the public needs to understand these adjustments and be clear on their new coverage parameters.

Today, Medicare pays Medicare Advantage insurance companies over $1,000 more per person on average than is spent per person in Original Medicare. This results in increased premiums for all Medicare beneficiaries, including the 77% of beneficiaries who are not currently enrolled in a Medicare Advantage plan. The new law eliminates this discrepancy. People enrolled in a Medicare Advantage plan will still receive all guaranteed Medicare benefits, and the law provides bonus payments to Medicare Advantage plans that provide high quality care.

Also currently, The Independent Payment Advisory Board begins operations to develop and submit proposals to Congress and the President aimed at extending the life of the Medicare Trust Fund.

The Board is expected to focus on ways to target waste in the system, and recommend ways to reduce costs, improve health outcomes for patients, and expand access to high-quality care. Funding will become available for these proposals October 2011.

Sources: Healthcare.gov and The Centers for Medicare and Medicaid Services

Written by Sy Kraft
Copyright: Medical News Today
Not to be reproduced without permission of Medical News Today

• Additional
• References
• Citations