Health care spending increased 3.6 percent in 2013, which one CMS official says is the lowest percentage on record going back to 1960, driven by slow growth rates in private insurance and Medicare. Some Affordable Care Act provisions — including the medical loss ratio provisions, Medicare productivity adjustments, and cuts to Medicare Advantage — put downward pressure on health spending growth, according to a Health Affairs article written by CMS officials in the Office of the Actuary, though other policies such as closing the donut hole had the opposite affect.
The article also says that slower growth in overall health care spending in 2013 was influenced by a pulling back of investments in medical structures and equipment as the medical sector held back on spending because of uncertain economic conditions and provider attempts to control costs. The CMS officials also noted that the growth in health spending and Gross Domestic Product have tended to converge several years after a recession, which stabilizes the health spending share of the GDP. Health spending remained stable in 2013 at 17.4 percent of GDP.
Medicare accounted for 20 percent of national spending 2013, the article says, and total spending growth for the program slowed in 2013. Health spending growth increased by 3.4 percent in 2013 compared to 4 percent in 2012. The productivity adjustment rates in Medicare fee-for-service and reduced MA base payment rates contributed to the slower growth rate, as did a slowdown in Medicare enrollment in 2013. Medicare enrollment increased by 3.2 percent in 2013 while it grew by 4.1 percent in 2012.
MA spending decelerated in 2013, the article says, increasing by 7.8 percent in 2013 instead of 10.6 percent in 2012, and MA spending per enrollee declined by 1.4 percent in 2013.
The productivity adjustments and MA cuts were part of the ACA, but not all aspects of the ACA helped lower the health spending growth rate. The report says that early Medicaid expansion, a temporary increase in Medicaid primary care provider payments and efforts to reduce the size of the donut hole all “exerted upward pressure on health spending growth.” The implementation of drug industry fees also worked to increase the health spending growth rate.
Medicaid accounted for 15 percent of national health spending in 2014, and spending increased 6.1 percent in 2013 after the two of the slowest annual rates of growth in the history of Medicaid. Medicaid enrollment also increased for the first time since the recession in 2013. Medicaid spending per beneficiary also grew faster in 2013 than it had in 2012, in part driven by better reimbursement rates, the article says. — Michelle M. Stein (mstein@iwpnews.com)
Click here to see the original article on the Inside Health Policy website.