U.S. healthcare spending to rise 5.3% in 2018

U.S. healthcare spending to rise 5.3% in 2018

Growth in national health spending is projected to be faster than projected growth in gross domestic product (GDP) by 1.0 percentage point over 2017-2026. It had previously forecast a 2017 rise of 5.4 percent. In any given year, roughly half of health care spending is on 5 percent of Americans.

US health care spending will keep growing faster than the overall economy in the foreseeable future, squeezing public insurance programs and employers who provide coverage, the government said Wednesday.

Health spending is expected to increase 5.5 percent annually through 2026, according to a report from the actuaries at the Department of Health and Human Services (HHS).

The primary drivers of the increased spending include the aging baby-boom population that will increase enrollment in the Medicare health insurance program for the elderly and disabled, a climb in the prices of medical goods and services and more disposable personal income, the report said.

As a result, the healthcare share of the economy is projected to climb to 19.7% by 2026-up from 17.9% in 2016, or $3.3 trillion.

In terms of other senior care categories, spending for nursing care and continuing care retirement communities (CCRCs) is expected to reach $261 billion in 2026.

Spending for 2017 rose faster than in 2016, when it rose 4.3 percent. A spike of 3.9 percent in 2016 was attributed to a one-time increase in Medicaid's risk-mitigation recovery payments, the study said.

Private health insurance spending is projected to average 4.7 percent over 2017-2026, the slowest of the major payers, reflecting low enrollment growth and downward pressure on utilization growth influenced by: lagged impact of slowing growth in income in 2016 and 2017, increasing prevalence of high-deductible health plans, and to a lesser extent, repeal of the penalty associated with individual mandate. Looking beyond 2018, the report says that the effect of prescription drug rebates will level off, which also contributes to a stronger growth in prices. Spending growth for prescription drugs is projected to average 6.3 percent for 2017-2016.

Notably, the report also forecasted that a slightly higher share of the United States population will be uninsured in 2026. Despite the uncertainty swirling around health policy, these projections are created using current laws already in place, and do not assume potential legislative changes.

That would average out to more than $16,000 per person, although the sickest patients account for most of the costs. "This is yet another call to action for CMS to increase market competition and consumer choice within our programs to help control costs and ensure that our programs are available for future generations".