A report prepared by CMS’s Office of the Actuary and published on-line by the journal Health Affairs, predicts that growth rate in national health expenditures (NHE) will decline due to the recession and Medicare physician payment cuts. However, the NHE rate will likely rebound as the economy improves.
In 2010, NHE growth is expected to decelerate to 3.9 percent from the projected 5.7 percent in 2009, while the nation’s Gross Domestic Product (GDP) is anticipated to rebound to 4.0 percent growth.
Much of the projected slowdown in NHE growth is attributable to a deceleration in Medicare spending growth (1.5 percent in 2010, from 8.1 percent in 2009) that is driven by a 21.3 percent reduction in Medicare physician payment rates called for under current law’s Sustainable Growth Rate (SGR) provisions.
Under a scenario where the SGR provisions of law are revised and physician payment rates are held at 2009 levels, total health spending is projected to grow 4.7 percent—0.8 percentage points faster than under current law—and total Medicare spending is projected to grow 5.1 percent.
Spending growth in three of the major health care sectors is expected to have accelerated in 2009. Hospital spending growth is expected to have increased 5.9 percent in 2009, up from 4.5 percent in 2008, and reached $760.6 billion.
Physician and clinical services spending growth is expected to have increased 6.3 percent in 2009, up from 5.0 percent in 2008, and reached $527.6 billion.
The 2009 accelerations in spending growth for hospital services and physician and clinical services were in part driven by higher Medicaid spending growth and increased demand for services associated with treating persons who contracted the H1N1 virus.
Over the projection period (2009-2019) of the CMS report, average annual spending growth for hospital, physician and clinical services, and prescription drugs is projected to increase 6.1 percent, 5.9 percent, and 6.3 percent, respectively.
The full health care spending projection data can be found on the CMS web site.
(Source: Press Release)