National Health Spending to Surpass $10,000 a Person in 2016

National health spending will average more than $10,000 a person this year for the first time, the Obama administration said Wednesday, a milestone that heralds somewhat faster growth in health spending after several years of exceptionally low growth.

By 2025, the administration reported, health care will represent 20 percent of the total economy, up from 17.8 percent last year. By 2025, one of every five Americans will be on Medicare, and the program will spend an average of nearly $18,000 a year for each beneficiary. Medicare spent about $12,000 per beneficiary in 2015.

The administration, in a report published in the journal Health Affairs, predicts that the pace of health spending will pick up in the coming decade, driven by improvements in the economy, higher medical prices and the aging of the people born from 1946 to 1964.

From 2015 to 2025, health spending is expected to grow an average of 5.8 percent a year — 1.3 percentage points faster than the economy, measured by the gross domestic product. The numbers are not adjusted for inflation.

By 2025, the report says, Medicaid, a program for lower-income people, is expected to spend an average of nearly $12,500 a year for each beneficiary, up from about $8,000 in 2015, and spending by private insurers is expected to average almost $8,600 for each person covered. Private insurers spent $5,400 per insured last year.

“Health spending growth is likely to accelerate in response to improvements in economic conditions that are projected over the coming decade,” said Sean P. Keehan, the lead author of the report, who is an economist in the actuary’s office at the Centers for Medicare and Medicaid Services. As the economy improves, he said, consumers are likely to have higher incomes, allowing them to spend more on health care goods and services.

Another factor fueling the growth of health spending, he said, is the “use of high-cost specialty drugs and faster growth in drug prices.”

The report estimates that national health spending increased 5.5 percent in 2015, to a total of $3.2 trillion. The expansion of coverage under the Affordable Care Act, through Medicaid and subsidized private insurance, contributed to higher spending on hospital and doctors’ services, “with fewer people reporting that they had skipped needed medical care because of cost concerns,” the report said.

The growth of actual and projected health spending has slowed considerably since the early 1990s. In 1993, when Bill and Hillary Clinton were leading a national campaign to remake the nation’s health care system, the Congressional Budget Office predicted that health spending would account for 20 percent of the economy by 2003. The Obama administration now says that milestone will not be reached until 2025.

Officials predict that health spending will grow an average of 5.7 percent a year from 2017 to 2019 and then 6 percent a year from 2020 to 2025.

Inflation, in the health care industry and in the general economy, was exceptionally low last year, with medical prices rising less than 1 percent, the administration said. Officials foresee “an uptick in projected medical price growth,” driven in part by higher wages for health care workers, the article says.

The deep recession of 2007 to 2009, followed by a slow recovery, curbed the growth of health spending, and many economists say that some provisions of the Affordable Care Act have also put downward pressure on spending.

The new report, by career employees at the Department of Health and Human Services, suggests another factor that may moderate the growth of health spending: Consumers are wary of using doctors’ services because they face higher out-of-pocket costs, including higher deductibles and co-payments.

At the same time, the report says, insurers will try to prevent sharp increases in prices by using narrow networks of health care providers, which limit consumers’ choice of doctors and hospitals.

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