This article below from CCH, a leading provider of business news, provides insight into how Health Care Reform is performing to date and sheds light into what is expected through to 2014.
In 2014, the year that the Patient Protection and Affordable Care Act is set to expand health insurance coverage, growth in health care spending is expected to reach 8.3 percent, according to estimates by a group of economists from the Centers for Medicare & Medicaid Office of the Actuary.
The PPACA is expected to boost demand for medical services, particularly for prescription drugs and physician and clinical services, the economists noted. By 2020, the federal government’s share of health care spending will reach 31 percent (from the current 27).
Average annual growth in national health spending is expected to be 0.1 percentage point higher (5.8 percent) under current law compared to projected average growth prior to the passage of the PPACA (5.7 percent) for 2010 through 2020.
Total government spending, including federal, state, and local governments, is expected to reach nearly 50 percent in 2020. The number of uninsured will be lower by nearly 30 million. These projections are reviewed in the article, “National Health Spending Projections Through 2020: Economic Recovery And Reform Drive Faster Spending Growth,” published in the July 2011 issue of Health Affairs.
In 2010, health spending is estimated to have grown at the rate of 3.9 percent, and a total of $2.6 trillion ($8,648 per person) due partly to the recession which caused many people to lose their health insurance when they lost their jobs. Health spending in 2010 represented 17.6 percent of gross domestic product. At the same time, health spending by private sources grew by only 2.6 percent to $822.3 billion for insurance premiums and the number of people covered in private plans fell by 5 million. Benefits paid by private plans amounted to $725.5 billion, a nearly $100 billion difference from premiums paid. Out-of-pocket spending rose by only 1.8 percent as the cash-strapped population put off seeking medical care and treatment.
The CMS economists project that out-of-pocket spending will grow faster through 2013, by an average 3.2 percent annually, as the U.S. economy recovers and the number of people with disposable income rises, along with more employers offering higher cost-share plans. Plans covering individuals with preexisting conditions and the expansion of coverage for young adult children to age 26 will result in an additional 1.6 million individuals covered in 2013.
In 2014, about 22.9 million new insureds will have coverage through expanded Medicaid and the new state health insurance exchanges, leading to an 8.3 percent spending growth, but a 1.3 percent drop in out-of-pocket spending, the CMS economists projected. The spending due to the coverage expansion is expected to more than offset Medicare savings obtained through the PPACA. A recent Standard & Poor study of the national health index found that Medicare spending increase rate has slowed to 2.64 percent, even before the full implementation of the PPACA.
Also in 2014, the growth in private health insurance premiums is projected to reach 9.4 percent (4.4 percent higher than without the PPACA), as 13.9 million people get coverage through the new state health insurance exchanges. Private health insurance will account for about 31 percent of national health spending, about the same as without the PPACA.
Because many of the new insureds will be younger and healthier and less likely to use hospitals or other more intensive services and the coverage expansion will allow a shift to preventive services, from more costly treatment for delayed, necessary care. Thus, by 2020, spending for prescription drugs and physician services will represent a higher share of health spending, 11 percent and 19 percent, respectively, while the share represented by hospital spending will drop to 30 percent. The excise tax on high cost health insurance plans likely will slow the growth in use of medical services and health spending beginning in 2018, as plan sponsors work to shift employees to lower cost, less generous, plans. While the share of national health expenditures will increase to 49 percent for governments (31 percent federal and 18 percent state and local), the share paid by private will fall to 18 percent, while households’ share will stay the same at 26 percent.
