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February 25, 2007 at 02:00 PM
Increases in spending on prescription drugs are slowing, but they are still growing fast enough to contribute heavily to a 6.9% average annual growth in U.S. health expenditures over the coming decade that will bring total spending in 2016 to over $4 trillion, government researchers predict.
The researchers, economists and actuaries in the Office of the Actuary at the Centers for Medicare and Medicaid Services, published their latest national health expenditure forecast in the Web edition of Health Affairs, a scientific journal that focuses on the delivery and financing of health care.
The research team, led by John Poisal, deputy director at the CMS National Health Statistics Group, is estimating that overall national health expenditures will increase an average of 6.9% from 2006 to 2016, compared with an average annual increase of 4.9% in U.S. gross domestic product.
The increase, which will amount to 6.1% per year per capita, will push total national health expenditures to $4.1 trillion, or 19.6% of GDP, in 2016, up from $2.1 trillion, or 16% of GDP, in 2006, the researchers estimate.
The “net cost of private health insurance”–health insurance premiums minus expenditures on medical claims–falls into a category that also includes health program administration. Spending in that category will increase about 6.8% per year, the CMS researchers estimate. That category will account for about $296 billion in expenditures, or 7.1% of national health expenditures, in 2016, down from 7.4% in 2006, the researchers predict.
The spread of high-deductible health plans could help hold down the health expenditure growth rate, the researchers write.
The effects of the traditional “underwriting cycle” on growth in net health insurance costs may be milder than in the past because private health insurers now appear to have the ability to obtain and analyze trend data more quickly and adjust premiums accordingly, the researchers write.
In general, as the population ages, “private health spending is expected to slow in response to slowing projected income growth,” the researchers write.
