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Analysts: Private health plan spending may rise 4% per year

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U.S. private health insurance spending might rise a little more quickly over the next few years, and spending at Medicare and Medicaid might increase a lot more quickly.

Related: Health entitlement spending: a story in 6 charts

  • Per-enrollee spending at private health insurers could increase by about 4 percent per year from 2014 through 2019, up from an average increase of 3.7 percent per year for the period from 2010 through 2014.

  • Per-enrollee spending at Medicare and Medicaid could increase about 3 percent per year, up from an average of about 1 percent per year.

Stacey McMorrow and John Holahan, analysts at the Washington, D.C.-based Urban Institute, have published data supporting those conclusions in a look at national health spending statistics from the U.S. Centers for Medicare & Medicaid Services (CMS). 

The analysts compare new CMS health spending numbers with numbers the agency published in September 2010, as Affordable Care Act health coverage provisions were starting to take effect.

Because collecting detailed health spending numbers takes time, government analysts are still using projections to estimate 2016 health spending totals, and to fill in the gaps in actual spending data for 2015.

In 2010, government analysts predicted that per-enrollee Medicare spending would rise 3.1 percent per year from 2010 through 2014, and that per-enrollee Medicaid spending would rise 0.8 per year.

Spending test

The government analysts originally thought per-enrollee private health insurance spending would increase 4.7 percent per year.

ACA Medicare provider payment rule changes, an increase in competition, an increase in private plan deductibles and a soft economy may have all helped to hold down U.S. health spending from 2010 through 2014, and those same forces could continue to hold increases in U.S. health spending over the next few years, McMorrow and Holahan write.

If the economy stays strong, what happens to U.S. health spending between 2019 through 2024 may be a good test of whether ACA provisions are really responsible for holding down U.S. health spending growth, the analysts say.

CMS analysts predicting that a stronger economy will push annual increases in health spending to about 6 percent from 2019 through 2024.

If, over that period, health spending growth is lower than what CMS is predicting, “it will become harder not to attribute at least some of the sustained cost containment to the ACA,” McMorrow and Holahan write. 


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