Drugs Might Be the 2019 Health Cost Good Guy: CMS Actuaries

Durable medical equipment, home health care, doctors and hospitals could do more to drive up U.S. health spending this year than prescription drug costs, according to a team of actuaries at the Centers for Medicare and Medicaid Services (CMS).

The CMS team is predicting that overall U.S. national health expenditures (NHE) will increase 4.8% this year, to $3.8 trillion.

(Related: High-Deductible Plans Are Holding Down Health Spending: Government Actuaries)

That compares with a 4.4% NHE increase in 2018, and a 4% projected increase for overall U.S. “gross domestic product,” or national income, for 2019.

Federal regulators, health insurers and members of Congress have been blasting drug makers this year over increases in the cost of drugs such as insulin.

But the CMS actuarial team is predicting that spending on drugs will increase only about 4.6% this year, to $360 billion. If so, the rate of increase in drug spending would be a little below the 2019 increase in overall health spending.

Here’s a look at what the CMS team expects six major health spending categories to look like this year, when compared with the 2018 spending levels

• Home health care: $109 billion (Up 6.8%).
• Durable medical equipment: $61 billion (Up 6.1%).
• Doctors: $768 billion (Up 5.4%).
• Hospitals: $1.25 trillion (Up 5.1%)
• Prescription drugs: $360 billion (Up 4.6%).
• Net cost of private health insurance: $252 billion (Up 2%).

Aging Population

Above-average increases in a health spending category may not be the result of waste, fraud or abuse.

In some cases, the rapid growth of the segment of the U.S. population over age 65 may be increasing spending on care for age-related conditions, such as heart disease and cancer.

In other cases, spending on items such as drugs, durable medical equipment or home health care may be helping people to reduce use of more expensive, less popular services, such as nursing home care or inpatient hospital care.

Insurance

One set of CMS tables shows how Medicare and Medicaid are gaining on traditional private health insurance.

The CMS actuarial team expects Medicaid and Medicare to combine for $1.4 trillion in U.S. health spending this year. Private health insurance could account for about $1.3 trillion in health spending.