With healthcare spending rising year over year, which beneficiary segments are contributing most?
Healthcare spending in the US continues to grow steadily across all beneficiary segments and healthcare payers.
2015 data from CMS, the CDC, and the Kaiser Family Foundation indicates that payers and individuals sponsoring their own healthcare spending will pay over $3 trillion for healthcare services.
Which health plan sponsors paid the most for healthcare services? How much did out-of-pocket spending account for in total US healthcare spending?
Private insurance accounts for 33 percent of US health expenditures. Expenditures in this segment increased 7.2 percent to $1.1 trillion in 2015, faster than the 5.8 percent growth in 2014. The acceleration in 2015 was driven by increased enrollment and high growth in benefits spending.
Private health insurance enrollment is also projected to grow in the near future, but at a slower rate than in 2014-15. The expected growth rate for private payer enrollment is 0.5 percent for 2016-25, compared to a 2.5 percent average growth in previous years.
From 2018 to 2019, private health insurance spending growth is projected to grow at an average rate of 5.7 percent per year. The increase will likely be due to faster growth in disposable incomes, and faster growth in prescription drug prices with varied competition between generics and brand-name pharmaceuticals.
Private health insurance spending is projected to decelerate in growth in 2020 to 4.8 percent based on the excise tax on high cost insurance plans, and then grow at an average rate of 5 percent per year for 2020 through 2025, according to estimates from CMS.
MEDICARE
Medicare was the highest spending public payer program, accounting for 20 percent of US healthcare spending in 2015.
Medicare spending grew 4.5 percent to $646.2 billion in 2015, which was a slight deceleration from the 4.8 growth percent in 2014. The slightly slower growth in 2015 was attributed to slower growth in Medicare enrollment, which increased by 2.7 percent to 54.3 million beneficiaries compared to a 3.1 percent increase in 2014.
Medicare spending is projected to grow at an average rate of 7.1 percent for 2016-25, the net result of slower growth early in the period and faster growth during the second half of projected growth.
The period of time between 2020-2025 is the fastest projected growth of Medicare spending, (7.6 percent) including a projected peak of 8 percent in the year 2020
Benefits spending in the program totaled $675 billion dollars, and average beneficiary cost in Medicare Part A and Part B was approximately $5053 and $5689 respectively, according to KFF.
By the year 2026, the average cost of Part A and B beneficiaries is expected to reach $7135 and $9426 per beneficiary per year.
MEDICAID
Spending on Medicaid enrollment accounted for 17 percent of national healthcare spending. Medicaid spending grew by 9.7 percent in 2015.
The growth rate of the total program fell from 11.4 percent in 2014 because of disparities between increased spending in state Medicaid programs and federal Medicaid programs. State and local Medicaid expenditures grew 4.9 percent, while federal Medicaid expenditures increased 12.6 percent in 2015.
Federal Medicaid spending grew because of the higher amount of newly eligible enrollees under the ACA. However, states still spent significant amounts on Medicaid services, according to KFF data.
Disparities in spending were immense as states such as Wyoming spent only $590 million on Medicaid, while Texas spent upward of $40 billion.
Out-Of-Pocket Patient Spending
Out-of-pocket healthcare spending accounted for 11 percent of US spending on healthcare services. Out-of-pocket spending grew 2.6 percent in 2015 to $338.1 billion.
From 2016 through 2025, out-of-pocket spending growth is projected to average 4.8 percent per year, up to a growth of 5.8 percent in 2020. In 2020 to 2025 average growth in out-of-pocket spending is expected to drop slightly to 5 percent.
Healthcare spending is expected to continue to rise rapidly private, public, and out-of-pocket spending sectors, requiring individuals and plan sponsors to proactively manage costs to the best of their ability.
Date: Oct 03, 2017