For the fifth consecutive year, federal healthcare spending grew less than 4 percent in 2013 – a markedly lower rate than the historical average of 7.2 percent per year from 1990-2008.
But government actuaries and economists say we shouldn’t expect slow growth to last much longer.
New estimates from the Office of the Actuary at the Centers for Medicare and Medicaid Services published in Health Affairs predict that government healthcare spending will jump more than 5 percent this year and 6 percent each of the next eight years. By 2023, they expect that it could total about $5.2 trillion – nearly one-fifth of the nation’s economy.
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But still, those estimates fall below the 7.2 percent rate seen in the 1990s and 2000s.
Some other key takeaways from the report:
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The study’s authors attribute the slow growth rate to sluggish economic recovery and an influx of baby boomers into the Medicare program, which has resulted in a lower average age and generally healthier Medicare population.
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As those boomers age and Medicaid expansion plays out, federal healthcare spending will continue to tick upward.
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Over the next decade, spending is expected to outpace GDP growth by just over 1 percent.
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According to the study, the number of uninsured people in the U.S. will fall from about 45 million in 2012 to 23 million by 2023.
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Medicare spending slowed in 2013 and is expected to remain low over the next two years as a result of low reimbursement rate increases and lower per-member use of inpatient services.
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Meanwhile, Medicaid spending is projected to grow nearly 13 percent this year but stabilize around 1 percent after 2016.
The full report is available here. The Washington Post did a thorough analysis, and The New York Times has some nice visualizations of the projections as well.
