U.S. healthcare spending to fall over next decade

U.S. healthcare spending will slow by 1.5 percent over the next decade, but will grow by two percent this year, according to a report from the Office of the Actuary at the Centers for Medicare and Medicaid Services.

The report, published in the September issue of Health Affairs, said that healthcare spending for 2013 was projected to grow by 3.6 percent because of a sluggish economy and rising costs of private insurance plans.

However, this year, healthcare spending is projected to rise to 5.6 percent and to grow at 5.7 percent over the coming decade because of “the combined effects of the Affordable Care Act’s coverage expansions, faster economic growth, and population aging.”

 The projected 5.7 growth rate is 1.5 percent less than the 7.2 percent average annual growth rate from 1990 to 2008.

The initial increase in healthcare spending will happen as more baby boomers sign up for Medicare and the number of uninsured people falls from 45 million in 2012 to 23 million in 2023, the report said.

Projected healthcare spending by both the public and private sectors will increase this year, the report said.  Spending on Medicaid will increase by 12.8 percent and private insurance by 6.8 percent.

Spending on physician and clinical services will fall to an annual growth rate of 3.3 percent, or $583.9 billion, for 2013, compared with a growth rate of 4.6 percent in 2012.

However, this year, it is expected to rise to 5.9 percent, thanks in part to people who are newly insured, the report said. Over the coming decade, it will reach an annual growth rate of 6.5 percent by 2020, before slowing to 5.9 percent by 2023.

Medicare physician fee schedule rates will stay at a zero percent increase in 2015 and a 0.6 percent per year after that in the coming decade, the report said.