Healthcare Spending Expected to Rise

Healthcare spending is expected to accelerate over the next decade, but the pace of growth won’t match pre-recession levels, according to a new study.

The Centers for Medicare and Medicaid Services (CMS) this week released a new report showing overall US healthcare expenditures grew by 3.6% last year to $2.9 trillion. Spending is expected to grow by another 5.6% this year, to $3.1 trillion.

By 2023, Americans will spend an estimated $5.2 trillion, at which point spending will be growing by an expected 6.3% per year.

The data are published in the September edition of Health Affairs.

The report attributes the growth to expanded coverage under the Affordable Care Act, as well as more favorable economic conditions generally. Healthcare spending is expected to grow at a faster clip than the overall economy, meaning healthcare’s share of the gross domestic product will increase from 17.2% in 2012 to 19.3% in 2023, should the projections bear out.

However, those numbers still represent a significant slowdown from the 7.2% average growth from 1990 until the start of the economic recession in 2008.

Physicians and clinical services

Spending on physicians and clinical services is expected to be on something of a rollercoaster over the next few years. Spending in that category slowed down to 3.3% in 2013, topping out at an estimated $583.9 billion.

“This is partly because of reductions in payments to Medicare providers resulting from the sequester and procedural payment changes,” the authors note, referring to the automatic spending cuts that stifled federal spending in early 2013.

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