Report foresees health spending uptick

Increase predicted to be modest over decade; care to equal 19.6% of economy

WASHINGTON -- The total amount America spends on health care will rise modestly over the next decade, according to new projections from government economists.

However, national health spending is still expected to outpace economic growth, threatening to make medical care increasingly unaffordable.

By 2024, health care is projected to consume 19.6 percent of the economy, up from 17.4 percent in 2013, said the report, published Tuesday in the journal Health Affairs.

"These trends are in contrast to ... when health spending growth remained at near historic low rates" during and after the recession, independent actuaries at the Department of Health and Human Services said in the report.

The annual projections provide an overview of emerging issues in the nation's large and complex health care system.

This year's report contains some encouraging news.

Though still increasing, health care spending is rising far more slowly than it did before the 2008-09 recession, when annual increases averaged 9 percent through the '80s, '90s and 2000s. Spending is projected to grow an average of 5.8 percent annually over the next decade.

The slowdown in total spending growth is happening despite the expansion in coverage made possible by the 2010 Patient Protection and Affordable Care Act, which is adding millions of previously uninsured Americans into health plans.

The report projects that the uninsured rate will decline to just 7.6 percent in 2024, down from 14 percent in 2013, before the coverage expansion began.

The number of elderly Americans is also increasing as baby boomers age, which tends to increase health spending.

Yet Medicare spending is projected to rise relatively slowly, restrained in part by measures in the health law to control costs.

"Per-capita spending and medical inflation are all at historically very modest levels," said Andy Slavitt, the official in President Barack Obama's administration who oversees the federal Medicare and Medicaid programs, as well as implementation of the law.

The report does not break out the specific effect of the Affordable Care Act.

But the authors said some provisions, such as the expansion of Medicaid and the creation of new insurance subsidies, tend to push up overall health spending, while other provisions, such as cuts in Medicare spending, tend to slow it. "There is a mix," said co-author John Poisal.

Other experts say changes in the way medical care is delivered, many spurred by the health law, are beginning to have an effect, as insurers and government health programs reward physician groups and hospitals that deliver higher-quality, more efficient health care.

Other trends identified in the report are more worrisome.

Rising costs of specialty drugs, such as new treatments for hepatitis C, threaten to make prescription drug costs skyrocket. Such costs are projected to have risen 12.6 percent in 2014, the highest rate in a dozen years.

Additionally, the increasing prevalence of high-deductible health plans, though helping to control overall health spending, will continue to place a larger burden on Americans.

By 2024, the average American's annual health care tab, including insurance premiums and out-of-pocket expenses such as co-pays and deductibles, is expected to top $4,216, up from $2,618 in 2014, according to the report.

A Section on 07/29/2015

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