National Health Expenditure
Projections, 2012–22: Slow
Growth until Coverage Expands
and Economy Improves
Gigi A. Cuckler, Andrea M. Sisko, Sean P. Keehan, Sheila D. Smith,
Andrew J. Madison, John A. Poisal, Joseph M. Lizonitz, Christian J. Wolfe
and Devin A. Stone
Office of the Actuary
Centers for Medicare and Medicaid Services
September 18, 2013
NHE Projections Overview
• Health spending growth is projected to remain slow, near 4 percent
through 2013
• In 2014, national health spending is projected to increase 6.1 percent
– Expansions of Medicaid and private health insurance coverage under the Affordable
Care Act are projected to increase the demand for health care, particularly for
prescription drugs and physician and clinical services
• By 2022, the number of uninsured Americans is projected to be reduced
by 30 million as a result of the Affordable Care Act
• For 2012-22, health spending is projected to grow at an average rate of
5.8 percent per year, leading to a projected health share of GDP of 19.9
percent by 2022
• Although projected growth is faster than in the recent past, it is still
slower than the growth experienced over the longer term
NHE Projections Methods
• Health spending projections for 2012-22, without the effects of the
Affordable Care Act (ACA), were developed using actuarial and
econometric modeling techniques, by type of service/good, payer,
and sponsor
• The impacts of the ACA were estimated using the Office of the
Actuary Health Reform Model (OHRM) and applied to the baseline
• New in these projections:
– Current Law Alternative to Sustainable Growth Rate (SGR)
– Projections incorporate June 2012 Supreme Court ruling as
applicable to the Medicaid expansion
– Projections account for one-year delay in employer mandate
Growth in National Health Expenditures (NHE),
1990-2022
12.0
NHE absent ACA
(blue dash)
Annual Growth Rate (%)
10.0
8.0
6.0
4.0
2.0
NHE current law
with alternative to SGR
(blue solid line)
Nominal GDP
(red dotted)
0.0
-2.0
1990
1994
1998
2002
2006
2010
2014
2018
2022
Source: Cuckler G et al., “National Health Expenditure Projections, 2012–22: Slow Growth until Coverage Expands and Economy Improves”
Health Affairs 32, no. 10 (2013) (to be published online 18 September 2013).
NHE Share of Gross Domestic Product (GDP),
1990-2022
2012:
2022:
17.9%
19.9%
20.0
Share of GDP (%)
18.0
16.0
14.0
12.0
10.0
1990
1994
1998
2002
2006
2010
2014
2018
2022
Source: Cuckler G et al., “National Health Expenditure Projections, 2012–22: Slow Growth until Coverage Expands and Economy Improves”
Health Affairs 32, no. 10 (2013) (to be published online 18 September 2013).
Impact of the Affordable Care Act
• ACA Impacts for 2012 to 2022
– Projected to reduce the number of uninsured people by thirty million
– Add approximately 0.1 percentage point to average annual health spending
growth over the full projection period
– Increase cumulative health spending by $621 billion
• Major Coverage Expansion Impacts (2014 to 2015)
– In 2014, NHE is projected to grow 6.1 percent (1.6 percentage-points faster than
in the absence of the ACA), reflecting expanded insurance coverage primarily
through Medicaid and Health Insurance Marketplaces
– In 2015, growth in national health spending is projected to remain near 6 percent
as the major effects of the coverage expansions continue
• After initial coverage expansions (2016 to 2022)
– The most significant one-time effects of the coverage expansions are expected
to subside
– However, Medicare spending growth constrained under reform with limits in
growth for certain Medicare provider payment updates and lower payments to
Medicare private plans
NHE Distribution and Average Annual
Growth by Type of Service, 2012-2022
Distribution of Spending
Annual Growth in Spending
Hospital
4.5%
4.7%
5.6%
6.4%
Physician
4.3%
7.1%
5.4%
6.2%
Hospital Care
32%
32%
Physician &
Clinical Services
20%
20%
9%
9%
23%
23%
16%
16%
2012
2022
Prescription
Drugs
All Other
Non-PHC
-0.1%
5.2%
6.9%
6.4%
Prescription Drugs
2012-13
2014
2015
2016-22
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.
SOURCE: CMS, Office of the Actuary, National Health Statistics Group.
7
NHE Distribution and Average Annual
Growth by Payer, 2012-2022
Distribution of Spending
11%
33%
21%
9%
33%
22%
15%
17%
20%
19%
2012
2022
Annual Growth in Spending
3.4%
Out Of Pocket
Private Health
Insurance
Out Of Pocket -1.5%
3.0%
4.6%
3.6%
7.7%
6.2%
5.8%
4.4%
5.1%
5.4%
7.7%
3.5%
12.2%
8.3%
6.8%
Private Health
Insurance
Medicare
Medicaid
All Other
NOTE: Sum of pieces may not equal 100% due to rounding.
SOURCE: CMS, Office of the Actuary, National Health Statistics Group.
Medicare
Medicaid
2012-13
2014
2015
2016-22
8
NHE Distribution and Average Annual
Growth by Type of Sponsor, 2012-2022
Distribution of Spending
18%
26%
7%
28%
18%
State and local
government
31%
Federal
government
7%
25%
21%
19%
2012
2022
Other Private
Revenues
Annual Growth in Spending
6.0%
5.6%
5.8%
6.2%
State and Local
Government
2.3%
Federal
Government
13.8%
6.8%
7.3%
3.9%
0.7%
5.1%
5.9%
Households
Households
3.5%
4.5%
5.8%
5.4%
Business
Business
NOTE: Sum of pieces may not equal 100% due to rounding.
SOURCE: CMS, Office of the Actuary, National Health Statistics Group.
2012-13
2014
2015
2016-22
9
A Detailed Review of Key Findings by
Time Period
Key Findings for 2012-13
Annual Growth in NHE, in historical context
• National health spending
estimated to have reached $2.8
trillion in 2012
• NHE growth projected to
remain below 4 percent through
2013 due to:
NHE
6.9%
3.9% 3.9%
3.8%
– sluggish economic recovery
– continued increases in cost-sharing
requirements for the privately
insured
– low growth for Medicare and
Medicaid
2000-2009
2010-2011
2012
2013
SOURCE: CMS, Office of the Actuary, National Health Statistics Group.
2012
2013
2014
2015
2016
2022
Key Findings for 2012-13
Average Annual Growth for Medicare & Medicaid Spending in 2012-13,
in historical context
•
•
Medicare: slowdown in growth across most services in 2012; sequestration
further slows projected growth in 2013
Medicaid: slower estimated growth in 2012 due to expiration of enhanced FMAP
rates in 2011, state cost containment efforts; faster projected growth in 2013 due
to higher spending per enrollee, supplemental payments to providers
Medicare
Medicaid
9.3%
7.2%
5.2%
4.6%
4.8%
4.2%
4.2%
2.2%
2000-2009
2010-2011
2012
2013
SOURCE: CMS, Office of the Actuary, National Health Statistics Group.
2012
2013
2014
2015
2016
2022
Key Findings for 2012-13
Average Annual Growth for Private Health Insurance Spending in 2012-13,
in historical context
Continued slow growth is largely due to ongoing increases in plan cost-sharing, the
decline in prescription drug spending, and continued restraint in the use of physician
office visits
Private Health Insurance
6.9%
3.6%
2000-2009
3.8%
2010-2011
3.4%
2012
2013
SOURCE: CMS, Office of the Actuary, National Health Statistics Group.
2012
2013
2014
2015
2016
2022
Key Findings for 2012-13
Continued Slow Estimated Growth Across Major Health Services,
in historical context
•
•
2012 would be third consecutive year of growth under 5 percent for hospital;
fourth consecutive year for physician & clinical services
Both hospital and physician growth impacted by projected slower economic and
price growth, sequestration in 2013
Hospital
Physician & Clinical Services
7.2%
6.3%
4.9%
4.6%
4.6%
4.1%
2000-2009
3.7%
2010-2011
2012
3.9%
2013
SOURCE: CMS, Office of the Actuary, National Health Statistics Group.
2012
2013
2014
2015
2016
2022
Key Findings for 2012-13
Continued Slow Estimated Growth Across Major Health Services,
in historical context
•
•
Estimated decline in 2012 due to increased adoption of generic drugs as a
number of popular brand-name drugs lost patent protection, increases in costsharing requirements, and lower spending on new medicines
2013 growth reflects diminished effect of patent expirations, faster growth in
specialty drugs and in dispensed prescriptions
Prescription Drugs
8.6%
1.6%
0.6%
-0.8%
2000-2009
2010-2011
2012
2013
SOURCE: CMS, Office of the Actuary, National Health Statistics Group.
2012
2013
2014
2015
2016
2022
Key Findings for 2014
Projected growth in 2014 by Payer
Annual growth reflects differential impacts of coverage expansion
14.0%
12.2%
12.0%
10.0%
7.7%
8.0%
6.0%
6.1%
5.3%
4.5%
3.3%
4.0%
3.0%
2.0%
-1.5%
0.0%
-2.0%
NHE
Private Health
Insurance
Medicaid
Out-of-Pocket
-4.0%
Absent ACA
Current Law with Alternative to SGR
SOURCE: CMS, Office of the Actuary, National Health Statistics Group.
2012
2013
2014
2015
2016
2022
Key Findings for 2014
Projected Impact of Coverage Expansion on 2014 Growth in Services
•
•
The newly insured are anticipated to be younger and healthier, and require less
acute care compared to people who currently have coverage
Consequently, the newly insured are expected to devote a higher share of their
medical spending to physician services and prescriptions drugs relative to
currently insured individuals
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
7.1%
5.2%
5.0%
4.6%
4.7%
2.3%
Prescription Drugs
Absent ACA
Physician & Clinical
Services
Hospital
Current Law with Alternative to SGR
SOURCE: CMS, Office of the Actuary, National Health Statistics Group.
2012
2013
2014
2015
2016
2022
Key Findings for 2015
Projected growth in 2015 by Payer, in context
Annual growth reflects faster economic growth, effect of continued coverage
expansion
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
-2.0%
-4.0%
12.2%
6.1% 5.8%
3.8%
8.3%
7.7%
6.2%
4.8%
3.4%
2.7%
3.0%
-1.5%
NHE
Private Health
Insurance
2013
2014
Medicaid
Out-of-Pocket
2015
SOURCE: CMS, Office of the Actuary, National Health Statistics Group.
2012
2013
2014
2015
2016
2022
Key Findings for 2015
Projected Growth by Major Service, in context
Faster economic growth, combined with the continued effect of the coverage
expansions are expected to result in elevated growth among the major services in
2015
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
7.1%
6.9%
5.6%
5.4%
5.2%
4.1%
3.9%
4.7%
0.6%
Prescription Drugs
Physician & Clinical
Services
2013
2014
Hospital
2015
SOURCE: CMS, Office of the Actuary, National Health Statistics Group.
2012
2013
2014
2015
2016
2022
Key Findings for 2016-2022
Average Annual Growth For Major Payers, 2016-22
•
•
•
Medicare growth influenced by faster growth in enrollment and per enrollee spending
due to population aging, expiration of sequestration in 2022; slower growth related to
ACA mandated payment adjustments
Medicaid is projected to grow faster under continuing coverage expansion (through
2016) and faster enrollment of aged and disabled
Private health insurance growth influenced by faster economic growth
7.7%
8.0%
6.8%
6.3%
6.0%
5.8%
4.0%
2.0%
0.0%
NHE
Medicare
Medicaid
Private Health
Insurance
SOURCE: CMS, Office of the Actuary, National Health Statistics Group.
2012
2013
2014
2015
2016
2022
Conclusion
• Health spending growth is projected to remain slow, near 4 percent
through 2013
• In 2014, national health spending is projected to increase 6.1 percent
– Expansions of Medicaid and private health insurance coverage under the Affordable
Care Act are projected to increase the demand for health care, particularly for
prescription drugs and physician and clinical services
• By 2022, the number of uninsured Americans is projected to be reduced
by 30 million as a result of the Affordable Care Act
• For 2012-22, health spending is projected to grow at an average rate of
5.8 percent per year, leading to a projected health share of GDP of 19.9
percent by 2022
• Although projected growth is faster than in the recent past, it is still
slower than the growth experienced over the longer term