Transcript Slides - Health Affairs

National Health Expenditure
Projections, 2014–24:
Spending Growth Faster
Than Recent Trends
Sean P. Keehan, Gigi A. Cuckler, Andrea M. Sisko, Andrew J. Madison,
Sheila D. Smith, Devin A. Stone, Christian J. Wolfe, John A. Poisal,
and Joseph M. Lizonitz
Office of the Actuary
Centers for Medicare & Medicaid Services
July 28, 2015
Major Findings
National Health Expenditure Projections, 2014–24
• For 2014-24, health spending is projected to grow at an average rate
of 5.8 percent per year due to the combined effects of the Affordable
Care Act’s (ACA’s) major coverage expansions, stronger expected
economic growth, and population aging.
• Health spending is projected to grow 1.1 percent faster than Gross
Domestic Product (GDP) per year over this period; the health share
of GDP is expected to rise from 17.4 percent in 2013 to 19.6 percent
by 2024.
• Given the ACA’s coverage expansions and premium subsidies
together with population aging, federal, state and local governments
are projected to finance 47 percent of national health spending by
2024 (from 43 percent in 2013).
• Although projected health spending growth is faster than in the recent
past, it is still slower than the growth experienced over the last three
decades prior to this most recent recession.
Growth in National Health Expenditures (NHE), Gross Domestic Product
(GDP), and the Health Share of GDP, 1990-2024
2024:
2013:
17.4%
20.0
19.6%
18.0
Percent (%)
16.0
Health Share Of GDP
14.0
12.0
10.0
NHE Growth (Blue)
2014-24 Avg. Annual Growth: 5.8%
8.0
6.0
4.0
2.0
0.0
Nominal GDP Growth (Red Dot)
2014-24 Avg. Annual Growth: 4.7%
-2.0
Source: Keehan S et al., “National health expenditure projections, 2014–24: Spending Growth Faster Than Recent Trends ,” Health Aff
(Millwood) 2015; (To be published online 28 July 2015).
Major Findings (cont’d)
National Health Expenditure Projections, 2014–24
• After six years of growth averaging 4.0 percent, national health
spending is projected to have grown 5.5 percent in 2014.
• Faster health spending due to ACA health insurance coverage expansions (8.4
million fewer uninsured in 2014) and rapid growth in prescription drug spending.
• Factors moderating health spending include the effects of continued increases in
cost-sharing requirements in private health insurance plans and near historically
low rates of medical inflation.
• After 2014, national health spending is projected to grow 5.3 percent
in 2015 and peak at 6.3 percent in 2020.
• Over this time, medical inflation rates are anticipated to return closer to those
observed over the last two decades together with economy-wide inflation.
• Medicare spending growth is expected to accelerate after 2015 due to expected
increases in use of medical goods and services by aging beneficiaries and
continued baby-boomer enrollment.
• Expected improvements in the economy contribute to faster projected growth in
private health insurance spending, particularly after 2018.
NHE Projections Methods
• Projections for 2014-24 were developed using actuarial and
econometric modeling techniques, by type of service/good, payer,
and sponsor.
• Impacts of ACA coverage expansions were estimated using the
most recent and updated version of the Office of the Actuary Health
Reform Model (OHRM).
• Projections consistent with the 2015 Medicare Trustees Report,
which incorporates recently enacted legislation that affects future
Medicare physician fee schedule updates.
Projected NHE Distribution and Average
Annual Growth by Type of Service
Distribution of Spending
Annual Growth in Spending
Hospital
4.4%
5.4%
5.6%
6.3%
Physician
4.8%
4.1%
4.7%
5.9%
Hospital Care
32%
32%
Physician &
Clinical Services
20%
19%
9%
10%
23%
22%
15%
16%
2013
2024
Prescription
Drugs
All Other
Non-PHC
12.6%
Prescription Drugs
2014
2015
7.6%
5.5%
6.6%
2016-18
2019-24
NOTE: Sum of pieces may not equal 100% due to rounding. All Other PHC includes spending for the categories of: Dental, Other
Professional, Nursing Home, Home Health, Durables, Other Nondurables, and Other Personal Health Care. The Non-PHC categories are:
Government Administration, Net Cost of Private Health Insurance, Government Public Health, Research, Structures, and Equipment.
6
SOURCE: CMS, Office of the Actuary, National Health Statistics Group.
Projected NHE Distribution and Average
Annual Growth by Payer
Distribution of Spending
12%
10%
Out Of Pocket
33%
32%
Private Health
Insurance
Annual Growth in Spending
Out Of Pocket
Private Health
Insurance
Medicare
20%
15%
23%
16%
Medicaid
Medicare
1.3%
2.1%
3.9%
5.5%
6.1%
6.4%
5.1%
5.6%
5.3%
4.7%
6.3%
7.9%
12.0%
20%
19%
2013
2024
All Other
NOTE: Sum of pieces may not equal 100% due to rounding.
SOURCE: CMS, Office of the Actuary, National Health Statistics Group.
Medicaid
2014
2015
8.2%
5.1%
5.9%
2016-18
2019-24
7
Projected NHE Distribution and Average
Annual Growth by Type of Sponsor
Distribution of Spending
26%
17%
7%
28%
29%
Federal
government
18%
State and
local
government
7%
Other Private
Revenues
27%
Households
21%
19%
2013
2024
Annual Growth in Spending
Federal Government
State and Local
Government
Households
Business
NOTE: Sum of pieces may not equal 100% due to rounding.
SOURCE: CMS, Office of the Actuary, National Health Statistics Group.
Business
2014
2015
10.1%
7.7%
6.0%
6.7%
5.2%
4.5%
5.8%
6.5%
2.6%
4.4%
5.3%
6.1%
5.2%
4.9%
3.8%
5.4%
2016-18
2019-24
8
Health Insurance Enrollment
and the Uninsured
•
In 2014, the number of uninsured Americans is projected to have declined by 8.4 million
to 35.7 million.
Health Insurance Enrollment (in Millions)
Historical Estimates
Projection
240.0
200.0
160.0
120.0
80.0
40.0
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024
Private health insurance
Medicaid
SOURCE: CMS, Office of the Actuary, National Health Statistics Group.
Medicare
Uninsured
Insured Share of the Population
•
The insured share of the population is projected to have increased to 89 percent in 2014
(from 86 percent in 2013).
Insured Share of the Population (%)
Projection
Historical Estimates
100%
95%
90%
85%
80%
75%
2000
2004
2008
2012
2016
Insured share of population (%, right axis)
SOURCE: CMS, Office of the Actuary, National Health Statistics Group.
2020
2024
A Detailed Review of Key Findings by Time
Period
Overview of 2014 Projection
Annual growth in NHE, in historical context
NHE
(historical)
•
After 6 years of growth below 5
percent, NHE is projected to have
grown 5.5 percent.
•
Faster projected growth is largely
due to the coverage expansions
under the ACA and a sharp rise in
prescription drug spending.
•
Projected NHE growth is 1.6
percentage points faster than GDP.
Thus, after 5 years at 17.4 percent,
the health share of GDP is
projected to have increased to 17.7
percent.
(projection)
7.3%
5.5%
4.0%
1990-2007
2008-13
2014
SOURCE: CMS, Office of the Actuary, National Health Statistics Group.
2014
2015
2016
2019
2024
Key Findings for 2014 Projection
Annual Growth For Major Payers, 2013 and 2014
•
•
•
Medicaid: faster projected growth in 2014 attributable to eligibility expansion.
Private Health Insurance (PHI): faster growth due to implementation of
Marketplaces, moderated by prevalence of plans with high cost sharing
requirements.
Out-of-Pocket (OOP): slower growth due to insurance coverage expansion.
NHE
Medicaid
PHI
OOP
12.0%
6.1%
6.1%
5.5%
3.6%
2.8%
3.2%
1.3%
2013
2014
SOURCE: CMS, Office of the Actuary, National Health Statistics Group.
2014
2015
2016
2019
2024
Key Findings for 2014 Projection
Annual Growth For Major Sectors, 2013 and 2014
•
•
•
Drugs: Much higher growth in 2014 due to new specialty drug treatments for
hepatitis C and smaller effect of brand-name drugs losing patent protection.
Physician: Effects of coverage expansion moderated by increased cost-sharing in
private health plans.
Hospital: Similar overall growth, but with substantial shifts in spending by payer.
NHE
Personal Health
Care
Hospital
Physician &
Clinical Services
Prescription
Drugs
12.6%
5.5%
3.6%
3.8%
5.2%
4.3% 4.4%
2013
3.8%
4.8%
2.5%
2014
SOURCE: CMS, Office of the Actuary, National Health Statistics Group.
2014
2015
2016
2019
2024
Key Findings for 2015
Projected growth by Payer
•
•
Medicaid: growth faster than other payers due to coverage expansion.
PHI: faster growth than NHE due to continued Marketplace implementation.
•
Medicare: slower growth than other payers related to slowdown in spending on
prescription drugs and physician and clinical services.
8.2%
6.4%
5.3%
NHE
4.7%
Private Health
Insurance
Medicaid
Medicare
SOURCE: CMS, Office of the Actuary, National Health Statistics Group.
2014
2015
2016
2019
2024
Key Findings for 2015
Projected Growth by Sector
•
•
•
Drugs: faster growth than other services in 2015, but slower growth than 2014 due
to lower costs associated with expensive specialty treatments for hepatitis C.
Hospital: faster growth than NHE and faster growth than 2014, driven by coverage
expansions.
Physician: slower growth than other services in 2015 as temporary Medicaid
payment increases to primary care providers expire.
7.6%
5.3%
5.1%
5.4%
4.1%
NHE
Personal Health
Care
Hospital
Physician &
Clinical Services
Prescription
Drugs
SOURCE: CMS, Office of the Actuary, National Health Statistics Group.
2014
2015
2016
2019
2024
Key Findings for 2016-2018
Average Annual Growth For Major Payers
•
•
•
Medicare: faster growth than other payers because of expectations that growth in the
use and intensity of services will return closer to historic norms.
Medicaid: slower growth than other payers due to slower enrollment growth.
PHI: slower growth than NHE due to more employers anticipated to shift toward highdeductible health plans, increased utilization of narrow networks, and the
implementation of the excise tax on high-cost employer-based insurance plans.
6.3%
5.3%
NHE
Medicare
5.1%
5.1%
Medicaid
Private Health
Insurance
SOURCE: CMS, Office of the Actuary, National Health Statistics Group.
2014
2015
2016
2019
2024
Key Findings for 2019-2024
Average Annual Growth For Major Payers
•
•
•
Medicare: faster growth than other payers because of continued strong enrollment
growth and faster per enrollee spending growth as a result of aging of previously
enrolled beneficiaries.
Medicaid: slower growth than NHE due to enrollment growth, despite increased use
associated with aged and disabled beneficiaries.
PHI: slower growth than other payers as enrollees continue to shift into Medicare and
out of PHI, despite faster projected economic growth.
7.9%
6.2%
NHE
Medicare
5.9%
5.6%
Medicaid
Private Health
Insurance
SOURCE: CMS, Office of the Actuary, National Health Statistics Group.
2014
2015
2016
2019
2024
Major Findings
National Health Expenditure Projections, 2014–24
• For 2014-24, health spending is projected to grow at an average rate
of 5.8 percent per year due to the combined effects of the ACA’s
major coverage expansions, stronger expected economic growth, and
population aging.
• Health spending is projected to grow 1.1 percent faster than Gross
Domestic Product (GDP) per year over this period; the health share
of GDP is expected to rise from 17.4 percent in 2013 to 19.6 percent
by 2024.
• Given the ACA’s coverage expansions and premium subsidies
together with population aging, federal, state and local governments
are projected to finance 47 percent of national health spending by
2024 (from 43 percent in 2013).
• Although projected health spending growth is faster than in the recent
past, it is still slower than the growth experienced over the last three
decades prior to this most recent recession.