National Health Expenditure Accounts Joe Benson, Devin Stone and The NHEA Team American Academy of Actuaries Webinar February 4, 2016
Overview National health spending reached $3.0 trillion, or $9,523 per person in 2014. National health spending increased 5.3 percent in 2014 following 2.9 percent growth in 2013. The share of Gross Domestic Product (GDP) devoted to health was 17.5 percent in 2014 up from a 17.3 percent share in 2013.
Annual Percent Change Growth in National Health Expenditures and Gross Domestic Product, 1988-2014 18.0 16.0 14.0 12.0 July 1990- March 1991 Recession March 2001- November 2001 Recession December 2007- June 2009 Recession 10.0 8.0 NHE: 5.3% 6.0 GDP: 4.1% 4.0 2.0 0.0-2.0 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Calendar Years SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group; U.S. Department of Commerce, Bureau of Economic Analysis and National Bureau of Economic Research, Inc.
Percent of GDP National Health Expenditures as a Share of Gross Domestic Product, 1988-2014 20.0 18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 July 1990- March 1991 Recession March 2001- November 2001 Recession December 2007 - June 2009 Recession 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 17.5% Calendar Years SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group; U.S. Department of Commerce, Bureau of Economic Analysis and National Bureau of Economic Research, Inc.
Drivers of Faster Growth in 2014 Coverage expansions as a result of the ACA Medicaid Private Health Insurance Rapid growth in total retail prescription drug spending
Enrollment in Private Health Insurance and Medicaid, 2013 and 2014 2013 2014 Difference Private Health Insurance (PHI) 187.7 189.9 +2.2 Medicaid 58.2 65.9 +7.7 Medicaid Newly Eligible 6.3 +6.3 Uninsured 44.2 35.5-8.7 Uninsured Share of Population 14.0% 11.2% -2.8% NOTE: Enrollment estimates are not mutually exclusive. Marketplace enrollment is included in the private health insurance category of the National Health Expenditure Accounts. The estimate of Marketplace enrollment for 2014 was 5.4 million and reflects average monthly enrollment and not enrollment at the end of the year.
Annual Percent Change Factors Accounting for Growth in Per Capita National Health Expenditures, Selected Calendar Years 2004-2014 Per capita health spending grew 4.5% in 2014 6.5% 6.0% 5.5% 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% 2004-2008 2009 2010 2011 2012 2013 2014 Residual use and intensity Age and sex factors Medical prices Per capita spending growth NOTES: Medical price growth, which includes economywide and excess medical-specific price growth (or changes in medical-specific prices in excess of economywide inflation), is calculated using the chain-weighted national health expenditures (NHE) deflator for NHE. "Residual use and intensity" is calculated by removing the effects of population, age and sex factors, and price growth from the nominal expenditure level.
The Nation s Health Dollar, Calendar Year 2014: Where It Went Other spending, 20% Hospital care, 32% Other health, residential, and personal care, 5% Government administration and net cost of health insurance, 8% Prescription drugs, 10% Nursing care facilities and continuing care retirement communities, 5% Physician and clinical services, 20% NOTE: Other spending includes Dental services, Other professional services, Home health care, Durable medical equipment, Other nondurable medical products, Government public health activities, and Investment.
Annual Growth in Spending by Type of Good and Service, 2013 and 2014 National Health Expenditures Hospital care 2.9 3.5 4.1 5.3 Physician and clinical services Prescription drugs Nursing care facilities and continuing care retirement communities Other health, residential, and personal care Dental services 1.3 1.5 2.5 2.4 2.8 4.6 3.6 4.7 4.1 12.2 Other professional services Home health care Other nondurable medical products Durable medical equipment 3.5 3.3 3.5 2.4 2.8 3.2 4.8 5.2 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 2013 2014
32% Annual Growth in Hospital Spending, 2010-2014 7.0 2014 highlights: 6.0 5.0 5.1 4.3 5.8 4.1 Total spending = $971.8 billion Spending increased 4.1% Faster growth in 2014 driven by: Medicaid 4.0 3.0 3.5 Private Health Insurance Medicare Residual use and intensity 2.0 1.0 0.0 2010 2011 2012 2013 2014
20% Annual Growth in Physician and Clinical Services Spending, 2010-2014 7.0 6.0 2014 highlights: Total spending = $603.7 billion 5.0 4.0 4.7 4.1 4.6 Spending increased 4.6% Faster growth in 2014 driven by: Medicaid 3.2 Private Health Insurance 3.0 2.0 2.5 Medicare Residual use and intensity Prices 1.0 0.0 2010 2011 2012 2013 2014
10% Annual Growth in Retail Prescription Drug Spending, 2010-2014 14.0 12.0 12.2 2014 highlights: Total spending = $297.7 billion 10.0 Spending increased 12.2% Faster growth in 2014 driven by: 8.0 Increased spending on new medicines 6.0 4.0 2.0 2.2 2.4 Hepatitis C Smaller impact from patent expirations Price increases for brandname drugs 0.0 0.1 0.2 2010 2011 2012 2013 2014
The Nation s Health Dollar, Calendar Year 2014: Where It Came From Out of pocket 11% Medicaid 16% Other thirdparty payers and programs 8% ublic health activit 3% Investment 5% Health insurance 73% Medicare 20% VA, DOD, and CHIP 4% Private health insurance 33% NOTES: Other third-party payers and programs includes Worksite health care, Other private revenues, Indian Health Service, Workers compensation, General assistance, Maternal and child health, Vocational rehabilitation, Substance Abuse and Mental Health Services Administration, School health, and Other federal and state local programs. Out of pocket includes co-payments, deductibles, and any amounts not covered by health insurance. Note: Sum of pieces may not equal 100% due to rounding.
Annual Growth in Spending by Source of Funds, 2013 and 2014 National Health Expenditures 2.9 5.3 Private health insurance 1.6 4.4 Medicare 3.0 5.5 Medicaid (Title XIX) 5.9 11.0 Out of pocket 2.1 1.3 Other third-party payers and programs Department of Veterans Affairs 6.3 6.0 6.2 8.2 Department of Defense -1.4 4.6 CHIP (Title XIX and Title XXI) -2.3 6.8-5.0 0.0 5.0 10.0 15.0 2013 2014
33% Private Health Insurance: Growth in Enrollment, Total, and Per Enrollee Expenditures, 2010 2014 8% 6% 4% 2% 0% 5.8% 5.0% 1.9% 1.7% -0.1% 1.6% 3.2% 1.2% 4.4% 2014 highlights: Total Spending = $991.0 billion Spending increased 4.4% Enrollment grew 1.2% Per enrollee growth 3.2% Faster growth driven by: ACA expansion Retail prescription drugs -2% -4% 2010 2011 2012 2013 2014 PHI Enrollment Growth PHI Expenditure Growth Per Enrollee PHI Expenditure Growth
20% Medicare: Growth in Enrollment, Total and Per Enrollee Expenditures, 2010 2014 8% 6% 4% 2% 0% -2% 1.8% 2.4% 0.1% 3.2% 3.1% 3.0% -0.2% 2010 2011 2012 2013 2014 Medicare Enrollment Growth Medicare Expenditure Growth Per Enrollee Medicare Expenditure Growth 5.5% 2.4% 2014 highlights: Total Spending = $618.7 billion Spending increased 5.5% Enrollment increased 3.1% Per enrollee growth 2.4% Faster growth in 2014 due to: Increased utilization of services Increased prescription drug spending Increased physician and clinical services spending
20% Medicare: Growth in FFS and Medicare Advantage Enrollment, Total Spending, and Per Enrollee Spending, 2010 2014 Fee-for-Service (70%) Medicare Advantage (30%) 12% 10% 12% 10% 9.4% 10.0% 11.6% 8% 8% 7.7% 6% 6% 4% 2% 0% 2.7% 2.6% 0.0% 1.0% 1.3% 0.3% 3.1% 2.7% 0.4% 4% 2% 0% -1.0% 1.6% 0.4% -1.5% 1.5% -2% 2010 2011 2012 2013 2014-2% 2010 2011 2012 2013 2014 FFS Enrollment FFS Spending Per FFS enrollee MA Enrollment MA Spending Per MA enrollee
16% Medicaid: Growth in Enrollment, Total, and Per Enrollee Expenditures, 2010 2014 14% 12% 10% 8% 6% 4% 2% 0% -2% -4% 13.2% 11.0% 5.9% 4.1% 1.4% 1.7% -0.8% -0.5% -2.0% 2010 2011 2012 2013 2014 Medicaid Enrollment Growth Medicaid Expenditure Growth Per Enrollee Medicaid Expenditure Growth 2014 highlights: Total Spending = $495.8 billion Spending increased 11.0% Enrollment increased 13.2% Faster growth in 2014 due to: ACA enrollment expansion Per enrollee declined 2.0% Newly insured tended to be lower cost adults and children
16% Medicaid: Growth in Total, Federal, and State & Local Expenditures, 2010 2014 21.8% 18.4% 12.4% 11.0% 7.7% 6.1% 2.9% 2.3% 3.8% 6.1% 5.9% 5.5% 0.9% -1.7% -7.2% 2010 2011 2012 2013 2014 Total Federal State & local
National Health Expenditures: Distribution and Growth by Type of Sponsor Distribution by Type of Sponsor Annual Growth by Type of Sponsor 100% 90% 18% 17% State & local government 14% 80% 70% 60% 50% 40% 30% 20% 10% 26% 28% 7% 7% 29% 28% 20% 20% Federal government Other private revenues Households Private business 12% 10% 8% 6% 4% 2% 0% -2% 2011 2012 2013 2014 State & local government Federal government 0% 2013 2014 Private business Households Note: Sum of pieces may not equal 100% due to rounding.
2014 National Health Expenditure Accounts: Summary National Health Expenditures reached $3.0 trillion, or $9,523 per person in 2014 National Health Expenditures represented a 17.5 percent share of Gross Domestic Product (GDP) Health spending grew faster at 5.3% in 2014 after several years of low growth Return to faster growth and increased share of GDP were largely influenced by the coverage expansions of the ACA and rapid prescription drug spending growth
National Health Expenditure Projections, 2015 24
Major Findings National Health Expenditure Projections, 2015 24 For 2015-24, health spending is projected to grow at an average rate of 5.8 percent per year due to the combined effects of the Affordable Care Act s (ACA s) major coverage expansions, stronger expected economic growth, and population aging. Although projected health spending growth is faster than in the recent past, it is still slower than the growth experienced over the last three decades prior to this most recent recession. Given the ACA s coverage expansions and premium subsidies together with population aging, federal, state and local governments are projected to finance 47 percent of national health spending by 2024 (from 45 percent in 2014). Health spending is projected to grow 1.1 percent faster than Gross Domestic Product (GDP) per year over this period; the health share of GDP is expected to rise from 17.5 percent in 2014 to 19.6 percent by 2024.
NHE Projections Methods Projections for 2015-24 were developed using actuarial and econometric modeling techniques, by type of service/good, payer, and sponsor. Projections consistent with the 2015 Medicare Trustees Report, which incorporates recently enacted legislation that affects future Medicare physician fee schedule updates. Impacts of ACA coverage expansions were estimated using the most recent and updated version of the Office of the Actuary Health Reform Model (OHRM).
Health Insurance Enrollment and the Uninsured 240.0 Health Insurance Enrollment (in Millions) Historical Estimates Projection 200.0 160.0 120.0 80.0 40.0-2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 Private health insurance Medicaid Medicare Uninsured SOURCE: CMS, Office of the Actuary, National Health Statistics Group.
Key Findings for 2015 Projected growth by Payer Medicaid: growth faster than other payers due to coverage expansion. PHI: faster growth than NHE due to continued Marketplace implementation. Medicare: slower growth than other payers related to slowdown in spending on prescription drugs and physician and clinical services. 8.2% 5.3% 6.4% 4.7% NHE Private Health Insurance Medicaid Medicare SOURCE: CMS, Office of the Actuary, National Health Statistics Group. 2015 2016 2019 2024
Key Findings for 2015 Projected Growth by Sector Drugs: faster growth than other services in 2015, but slower growth than 2014 due to lower costs associated with expensive specialty treatments for hepatitis C. Hospital: faster growth than NHE and faster growth than 2014, driven by coverage expansions. Physician: slower growth than other services in 2015 as temporary Medicaid payment increases to primary care providers expire. 7.6% 5.3% 5.1% 5.4% 4.1% NHE Personal Health Care Hospital SOURCE: CMS, Office of the Actuary, National Health Statistics Group. Physician & Clinical Services Prescription Drugs 2015 2016 2019 2024
Key Findings for 2016-2018 Average Annual Growth For Major Payers Medicare: faster growth than other payers because of expectations that growth in the use and intensity of services will return closer to historic norms. Medicaid: slower growth than other payers due to slower enrollment growth. PHI: slower growth than NHE due to more employers anticipated to shift toward high-deductible health plans, increased utilization of narrow networks, and the implementation of the excise tax on high-cost employer-based insurance plans. 5.3% 6.3% 5.1% 5.1% NHE Medicare Medicaid Private Health Insurance SOURCE: CMS, Office of the Actuary, National Health Statistics Group. 2015 2016 2019 2024
Key Findings for 2019-2024 Average Annual Growth For Major Payers Medicare: faster growth than other payers because of continued strong enrollment growth and faster per enrollee spending growth as a result of aging of previously enrolled beneficiaries. Medicaid: slower growth than NHE due to enrollment growth, despite increased use associated with aged and disabled beneficiaries. PHI: slower growth than other payers as enrollees continue to shift into Medicare and out of PHI, despite faster projected economic growth. 6.2% 7.9% 5.9% 5.6% NHE Medicare Medicaid Private Health Insurance SOURCE: CMS, Office of the Actuary, National Health Statistics Group. 2015 2016 2019 2024
Additional Resources National Health Expenditure Accounts https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and- Reports/NationalHealthExpendData/index.html Historical data https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and- Reports/NationalHealthExpendData/NationalHealthAccountsHistorical.html Projections https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and- Reports/NationalHealthExpendData/NationalHealthAccountsProjected.html