The economists and actuaries at CMS have a very tough job in trying to project health care spending for the next 10 years, as they do each year. It’s so difficult right now — with health care transforming into something new — that I have to question how useful the long-term projections are. CMS released the latest version of their estimates yesterday.
That said, the near-term numbers are informative. They show national health expenditures climbing an estimated 3.6 percent in 2013, 5.6 percent in 2014 and 4.9 percent in 2015.
And those figures look pretty good in both absolute terms and relative to gross domestic product, which is projected to rise 3.4 percent in 2013, 3.3 percent in 2014 and 4.9 percent in 2015.
Officials for the AHA welcomed the news that cost growth last year was so low. "Continued low growth into 2013 is good news for the health care system and shows that structural changes are taking hold," said Caroline Steinberg, vice president of trends analysis, in an email from a spokeswoman.
The projections for an uptick in growth this year were not unexpected. "Coverage expansion will likely cause growth in 2014, but this is tempered by other factors such as low growth in hospital prices and declining inpatient utilization," Steinberg said.
CMS officials who produce the estimates projected that spending growth will fall in 2015 as a result of slowdowns in Medicare and Medicaid spending, particularly for Medicare Advantage plans. The report estimates that in that year Medicare growth will fall 1.5 percentage points to 2.7 percent.
"In addition, growth in Medicaid spending is projected to revert to a more historically consistent rate of 6.7 percent because the temporary increase in payments to primary care providers is scheduled to expire, and the surge in enrollment in 2014 … is projected to subside somewhat," CMS authors wrote.
Looking out much further than that, I can't see how the numbers can mean very much to hospital managers working in the trenches. There are too many variables that could change things significantly.
CMS projects that between 2016 and 2023, hospital spending will rise 6.9 percent, a level that sounds a little high in this era of reform. “It is unlikely that hospital spending growth will rebound that much given continued pressures on reimbursement from Medicare and private payers," Steinberg said. "Both utilization and price growth have been lower and we would expect that trend to continue,” she said.