Filed Under:Health Insurance, Individual Health

Forecasters see 13 percent health insurance spending jump

PPACA could help increase U.S. health premium spending 6.8 percent this year, CMS analysts say.
PPACA could help increase U.S. health premium spending 6.8 percent this year, CMS analysts say.

U.S. spending on health insurance plan administration may boom this year, and spending on dental services and basic health insurance may whisper.

Economists and actuaries in the Office of the Actuary at the Centers for Medicare & Medicaid Services (CMS) have included projections supporting those predictions in a paper published behind a paywall in the Web edition of Health Affairs, an academic journal.

The net cost of private health insurance -- or the revenue that the insurers keep after paying claims -- could rise about 13 percent this year, to $197 billion. Total spending on private health premiums could increase 6.8 percent, to $1 trillion.

Spending on dental care may inch up 3.1 percent, to $117 billion, and investment in basic health research could creep up just 0.1 percent, to $47 billion. Basic research spending could actually fall 1.7 percent in 2015, to about $46 billion.

Andrea Sisko and the other CMS analysts who worked on the cost projection paper estimate that overall national health expenditures (NHE) are rising 5.6 percent this year, to about $3.1 trillion, or $9,600 per capita. The overall projected rate of growth is up from 3.6 percent in 2013. 

The analysts expect health spending to eat up 17.6 percent of U.S. gross domestic product (GDP) this year, up from 17.2 percent in both 2012 and 2013. 

A year ago, the CMS analysts were predicting in a similar NHE paper that the birth of new Patient Protection and Affordable Care Act (PPACA) programs, such as the PPACA Medicaid expansion program and the PPACA public exchange program, would lead to a 6.1 percent increase in 2014 health spending. The analysts were projecting 11 percent growth in the net cost of private health insurance. 

The analysts now are predicting that health care will account for $5.2 trillion in spending in 2023, and 19.3 percent of 2023 GDP. In 2023, the net cost of private health insurance could rise to $341 billion. Faster economic growth should help private health insurers increase premium revenue 5.4 percent per year from 2016 through 2023, the analysts add. 

The analysts note this year -- as they did in the 2013 NHE projections paper -- that PPACA could hurt private health insurance spending as well as help it, by encouraging some employers to drop health benefits. The coming PPACA "Cadillac plan tax" could also slow premium growth, the analysts say.

See also: Medical cost trend may creep up in 2015

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