Wednesday, July 29, 2015

Health-care spending increases predicted to be larger in next decade than last few years

Health-care spending increased 5.5 percent in 2014—to $3.1 trillion—and is expected to have an average annual growth of 5.8 percent between 2014 and 2024, starting "a period in which health-care spending will creep up after years of a slowdown in spending growth," says a report by the Centers for Medicare and Medicaid Services published Tuesday in Health Affairs.

If that proves true, by 2024 health care will account "for nearly a fifth of the gross domestic product, and federal, state and local governments are expected to foot nearly half the bill," the study says. The main reasons for the increase in spending are that more people are insured under federal health reform, the aging Baby Boomer generation and stronger economic growth, researcher Sean P. Keehan told Carolyn Johnson of The Washington Post.

"Prescription drug spending has also increased markedly, largely due to the debut of expensive hepatitis C drugs over the last two years, Keehan said," Johnson writes. "In 2013, prescription drug spending grew just 2.5 percent compared with the previous year, whereas in 2014, drug spending shot up 12.6 percent. The effects of those drugs on 2015 spending are expected to be tempered by rebates offered by the pharmaceutical companies. Prescription drug spending growth is projected to increase 7.6 percent in 2015."

Robert Zirkelbach, senior vice president for communications at PhRMA, the pharmaceutical industry's main lobby, told Johnson, "The report is very clear that last year was unique and it was driven in part by expansion of health-care coverage and new cures that are available to patients. And even with new treatments for hepatitis C, high cholesterol, and cancer, the federal government is projecting that the spending going to medicine will continue to be approximately 10 percent through 2024, which is the same share it was in 1960." (Read more)

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