Healthcare spending projected to increase 5.6% in 2014

The Office of the Actuary (OA) at the Centers for Medicare and Medicaid Services projects a 5.6% increase in healthcare spending for 2014.

For the past three years, healthcare spending has slowed, which the study’s authors attribute to the sluggish economy. While 2014 will see a slight uptick, the report notes that it is still slower than the 7.2% spending growth average from 1990 to 2008.

READ: Why is Medicare spending slowing?

In 2012, healthcare spending accounted for 17.2% of the country’s gross domestic product (GDP), and that’s expected to increase to 19.3% by 2023.

The authors attribute the increase in spending to the greater number of insured patients through the Affordable Care Act (ACA), in addition to an aging population.

“Analysis of historical trends tells us that health care spending tracks with economic growth, so as the economy is anticipated to improve over the next decade, health spending growth is projected to grow faster,” said Andrea Sisko, an OA economist and the lead author for the study, in a written statement. “This, in addition to the baby boomers aging and increased insurance coverage mandated by ACA, is expected to result in the health share of GDP rising to nearly one-fifth of the nation's economy by 2023.”

The report projects that Medicare spending growth will remain low during the next two years, as a result of slow payment increase and reduced inpatient hospital use by beneficiaries. The OA expects a 2.7% growth rate in 2015.

That is consistent with a Congressional Budget Office forecast released earlier this week that found Medicare spending per-person is falling.  

The OA study will appear in the October issue of Health Affairs.