National Health Care Spending Still Growing, But Slower than Expected

While not at an aggressive rate, health care spending is still projected to continue growing according to a Centers for Medicare and Medicaid Services (CMS) Office of the Actuary report published this month in Health Affairs. Total health care spending is predicted to grow an average of 5.8 percent per year between 2014-2024—but that is much less than the 9 per cent average growth rate reported for the thirty-year period ending in 2008. "We cannot be complacent," warned Andy Slavitt, acting administrator for CMS, in a press release announcing the report. "The task ahead for all of us is to keep people healthier while spending smarter across all categories of care delivery so that we can sustain these results."

The report predicts that in 2014 health care spending will have reached $3.1 trillion, up 5.5 per cent from the prior year thanks in large part to many gaining coverage for the first time under the Affordable Care Act (ACA). That translates to about $9,695 per person. By 2024, 19.6 percent of the U.S. gross domestic product will be attributed to health care as the number of insured persons is projected to rise to 92.4 percent in the next 11 years.

For Medicaid, while spending overall increased 12 per cent for 2014 largely due to enrollment increasing with coverage expansion under the ACA, spending per person is predicted to fall .8 percent thanks to healthier new enrollees.

More good news: premium growth is also expected to slow down with only a 2.8 percent growth in private health plan premiums for 2015 (and staying below 6 percent through 2024) due to healthier enrollees and employers offering more high deductible plans. Despite these high deductible plans, the report still predicts the portion of spending that comes out of American's pockets will fall to 10 percent in 2024 (from 11.6 percent in 2013).

Takeaway: The Affordable Care Act and Medicaid expanded eligibility have increased the number of insured but overall the rate of growth in health care cost remains slower than historical averages.