Managed Care

Health spending expected to slow











According to researchers, health spending growth will slow over the next 10 years, both private and public. Per-enrollee private health insurance benefit growth peaked in 2001, but per-enrollee premium growth did not peak until 2002.

In addition, the number of people with private health insurance will begin to increase again in 2003.

This projection is based on an econometric model of private health spending and reflects trends in personal income growth that suggest a slowdown in health spending growth over the next few years.

Hospital spending growth accelerated in 2001, to 8.3 percent (up from 5.8 percent growth in 2000), but slowed slightly to 7.4 percent in 2002.

"In 2002, hospital spending accounted for 27.1 percent of the total increase in national health spending. However, hospital care is the largest category of national health spending, which means that this sector will most likely be the largest driver in percentage terms even if its growth rate was similar to the growth rate of total health spending," says Sean Keehan of CMS's Office of the Actuary, one of the authors of a study on spending growth.

"As for what is projected to continue to drive health spending up as a share of the economy, the continued strong demand for medical products and services, including new technologies, and the increase in health sector prices are the major drivers. The aging of the population has only a minor effect during the projection period," Keehan concludes.

SOURCE: CENTERS FOR MEDICARE AND MEDICAID SERVICES, OFFICE OF THE ACTUARY

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