After six years of slower growth, healthcare spending growth is poised to accelerate in the next decade, according to HCFA statistics set to be released this week.
And that is renewing the question of whether the federal government might seek new limits on Medicare and Medicaid expenditures.
HCFA's annual national health expenditures report, set to be published this week, shows that U.S. healthcare spending exceeded $1.2 trillion in 1999, up $64.6 billion, or 5.6%, from 1998 (See chart). Of that total, Americans spent $390.9 billion, or 32.2%, on hospital care.
The 1999 figures represent an uptick from the slower spending growth earlier in the 1990s. HCFA's actuary's office, which compiled the spending report, said that slower growth resulted in part from Medicare and Medicaid spending growth caps ordered by the Balanced Budget Act of 1997. Those caps combined with one-time savings that resulted from slower utilization growth as an increased number of workers enrolled in managed-care plans.
But the federal government has released its tight grip on Medicare and Medicaid spending by enacting laws in 1999 and 2000 that repealed parts of the budget law. Meanwhile, workers in employer-sponsored health plans have migrated in larger numbers to less-restrictive PPO and point-of-service plans, driving up utilization.
HCFA projected that total national healthcare annual spending growth increased 8.3% in 2000 and would increase 7.1% in 2001 and 9.9% in 2002. From 2002 to 2010 it will rise an average of 6.9%, the agency predicted.
Though not reaching quite the speed of healthcare spending growth in the 1980s, when it climbed as high as 12.3% a year, the quickening of expenditures may spur congressional action to rein in federal programs, said one healthcare expert.
"If in fact Medicare expenditures do rise in 2001 and 2002 faster than they did in 1998 and 1999, it's going to create another crisis that Congress will have to deal with," said Lawrence Goldberg, director of national healthcare affairs in the Washington office of Deloitte & Touche.
HCFA projects spending growth for services in hospitals, nursing homes and physician offices to be slower than overall healthcare spending growth. The only provider category seen as rising faster than the average is home health agencies.
Much higher than that, however, will be spending growth for prescription drugs. The actuary's report, published in the March/April edition of the journal Health Affairs, said spending for prescription drugs rose 16.9% in 1999 to $99.6 billion, and 17.4% in 2000 to $116.9 billion. From 2002 to 2010, annual spending on prescription drugs will rise an average of 11.3% per year.
Of that, much is likely to be spent by Medicare beneficiaries. The Congressional Budget Office recently estimated prescription drug spending by seniors at $70.6 billion this year alone. That continued increase in prescription drug spending could spell trouble for advocates of a prescription drug benefit in Medicare.
It also could spell trouble for health insurers trying to keep a lid on costs and keep premiums down.
"We've got infinite demand and finite dollars," said Scott Serota, president and chief executive officer of the Blue Cross and Blue Shield Association. "As premiums increase, the number of uninsured increase. You're going to create a situation where growing numbers of people don't have access to anything."