2014 National Health Spending: The Great Moderation Likely Is Not Over

Two weeks ago, the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS) released their 2014 US health spending estimate showing the highest national health spending growth rate since 2008 — 5.3 percent. The question on everyone’s mind: is this the end of the Great Moderation? In my view, the answer is “no.” The headline rate news for 2014 masked an interesting fact: CMS revised their estimate of spending growth for 2013 to 2.9 percent, by far the lowest rate of national health expenditure growth since Dwight Eisenhower’s presidency, years before the advent of Medicare and Medicaid. Despite the first installment of a significant coverage expansion mandated by the Affordable Care Act (ACA), core health spending growth in 2014 remained at close to record lows: hospital spending (almost a trillion dollars) grew at 4.1 percent and professional services (about $800 billion) at 4.4 percent. These two categories of spending amount to nearly 59 percent of total national health spending. Take out the effects of the coverage expansion, population growth (+0.7 percent), and inflation (1.6 percent), and core health system spending growth remains at close to a dead stop. Hospital spending growth in 2014 is second lowest in 20 years, and about half the rate of growth of a decade ago. And as Altarum Institute’s November 2015 health care pricing survey shows, both hospitals and physicians face the worst pricing pressure ever recorded. Impact Of The ACA...
Source: Health Affairs Blog - Category: Health Management Authors: Tags: Costs and Spending Drugs and Medical Technology Featured Following the ACA Insurance and Coverage Medicaid and CHIP Medicare Payment Policy Accountable Care Organizations ACOs CMS hepatitis C national health spending Sovaldi Source Type: blogs