- Medicare spending is expected to grow at a slower than usual 3% this year, then average 7% annual growth over the next decade — reaching $1.2 million in 2028, according to a new Congressional Budget Office report.
- Only about 5% of that increase is due to cost growth, with the rest driven by growing enrollment.
- Medicare outlays will account for about half of all outlays for major healthcare programs in 2018, rising to one-third by 2028.
The CBO estimates reflect other recent papers showing no end to rising U.S. healthcare costs.
A recent CMS analysis put total U.S. healthcare spending at $3.3 trillion in 2016, up 4.3% from the prior year. The increase nudged the category as a share of U.S. GDP from 17.7% to 17.9%, with per capita spending up $354 to $10,348. A CMS analysis from last spring projected that growth in national healthcare spending would average 5.6% annually from 2016 to 2025.
CMS and private payers have pushed for more value-based care and reimbursement to rein in healthcare costs, but with mixed results.
Bundled care models, bonus payments and capitation could move the cost needle by pushing providers to care for the whole patient rather than focusing on individual services, he said.
Spending for Medicaid this year is expected to grow by 2%, or $9 billion, the slowest rate since 2012, CBO says. Starting next year, the program will average 5.5% growth yearly, fueled by increasing enrollment and per capita costs.
Meanwhile, health insurance subsidies and related spending is expected to rise 21% to $10 billion in 2018, then grow at a more modest 5% rate through the remainder of the decade. The spurt this year is mostly due to a 34% hike in premiums for silver tier plans in the Affordable Care Act insurance markets.
If there is no change in the ACA, outlays for subsidies and related spending will increase by 60% to $91 billion, from $58 billion this year, the report says.