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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.

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Growth in National Health Expenditures and Gross Domestic Product, 1988-2014

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.

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GDP: 4.1%

NHE: 5.3%

July 1990- March 1991 Recession

March 2001- November 2001

Recession

Calendar Years

December 2007-June 2009 Recession

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

National Health Expenditures as a Share of Gross Domestic Product, 1988-2014

Calendar Years

Pe

rce

nt

of

GD

P

17.5% March 2001- November 2001 Recession

July 1990- March 1991 Recession

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.

December 2007 - June 2009

Recession

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. SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

Factors Accounting for Growth in Per Capita National Health Expenditures, Selected Calendar Years 2004-2014

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. SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

6.5%

2004-2008 2009 2010 2011 2012 2013 2014

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Residual use and intensity Age and sex factors Medical prices Per capita spending growth

Per capita health spending grew 4.5% in 2014

The Nation’s Health Dollar, Calendar Year 2014: Where It Went

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. SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

Hospital care, 32%

Physician and clinical services, 20%

Nursing care facilities and continuing care

retirement communities, 5%

Prescription drugs, 10%

Government administration and net

cost of health insurance, 8%

Other health, residential, and personal care, 5%

Other spending, 20%

Annual Growth in Spending by Type of Good and Service, 2013 and 2014

3.2

2.4

4.8

5.2

2.8

4.1

3.6

12.2

4.6

4.1

5.3

2.8

3.5

3.3

3.5

1.5

4.7

1.3

2.4

2.5

3.5

2.9

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0

Durable medical equipment

Other nondurable medical products

Home health care

Other professional services

Dental services

Other health, residential, and personal care

Nursing care facilities and continuing care retirementcommunities

Prescription drugs

Physician and clinical services

Hospital care

National Health Expenditures

2013 2014


2014 highlights:

• Total spending = $971.8 billion

• Spending increased 4.1%

• Faster growth in 2014 driven by:

– Medicaid

– Private Health Insurance

– Medicare

– Residual use and intensity

Annual Growth in Hospital Spending, 2010 - 2014

32%


5.1

4.3

5.8

3.5

4.1

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2010 2011 2012 2013 2014

Annual Growth in Physician and Clinical Services Spending, 2010 - 2014

2014 highlights:




– Medicaid

– Private Health Insurance

– Medicare

– Residual use and intensity

– Prices

20%


3.2

4.7

4.1

2.5

4.6

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2010 2011 2012 2013 2014

Annual Growth in Retail Prescription Drug Spending, 2010- 2014

10%


2014 highlights:




– Increased spending on new medicines

• Hepatitis C

– Smaller impact from patent expirations

– Price increases for brand-name drugs

0.1

2.2

0.2

2.4

12.2

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

2010 2011 2012 2013 2014

The Nation’s Health Dollar, Calendar Year 2014: Where It Came From

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. SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

Investment 5%

Public health activity3%

Other third-party payers

and programs 8%

Out of pocket 11%

Health insurance

73%

Medicare

Medicaid

Private health

insurance VA, DOD, and CHIP

16%

20%

33%

4%

Annual Growth in Spending by Source of Funds, 2013 and 2014

-2.3

4.6

8.2

6.0

1.3

11.0

5.5

4.4

5.3

6.8

-1.4

6.2

6.3

2.1

5.9

3.0

1.6

2.9

-5.0 0.0 5.0 10.0 15.0

CHIP (Title XIX and Title XXI)

Department of Defense

Department of Veterans Affairs

Other third-party payers and programs

Out of pocket

Medicaid (Title XIX)

Medicare

Private health insurance

National Health Expenditures

2013 2014


Private Health Insurance: Growth in Enrollment, Total, and Per Enrollee Expenditures, 2010 – 2014

-0.1%

1.2% 1.6%

4.4%

5.8%

5.0%

1.9% 1.7%

3.2%

-4%

-2%

0%

2%

4%

6%

8%

2010 2011 2012 2013 2014

PHI Enrollment Growth

PHI Expenditure Growth

Per Enrollee PHI Expenditure Growth


33%

2014 highlights:

• Total Spending = $991.0 billion


• Enrollment grew 1.2%

• Per enrollee growth 3.2%

• Faster growth driven by:

–ACA expansion

–Retail prescription drugs

Medicare: Growth in Enrollment, Total and Per Enrollee Expenditures, 2010 – 2014

3.2% 3.1% 3.0%

5.5%

1.8%

2.4%

0.1%

-0.2%

2.4%

-2%

0%

2%

4%

6%

8%

2010 2011 2012 2013 2014

Medicare Enrollment Growth

Medicare Expenditure Growth

Per Enrollee Medicare Expenditure Growth


2014 highlights:



• 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

1.0%

0.4%

1.3%

3.1%

2.7% 2.6%

0.0%

0.3%

2.7%

-2%

0%

2%

4%

6%

8%

10%

12%

2010 2011 2012 2013 2014

Fee-for-Service (70%)

FFS Enrollment FFS Spending Per FFS enrollee

9.4%

10.0%

7.7%

11.6%

-1.0%

1.6% 0.4%

-1.5%

1.5%

-2%

0%

2%

4%

6%

8%

10%

12%

2010 2011 2012 2013 2014

Medicare Advantage (30%)

MA Enrollment MA Spending Per MA enrollee


20%

Medicaid: Growth in Enrollment, Total, and Per Enrollee Expenditures, 2010 – 2014


16%

1.7%

13.2%

5.9%

11.0%

-0.8% -0.5%

1.4%

4.1%

-2.0%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

2010 2011 2012 2013 2014

Medicaid Enrollment Growth

Medicaid Expenditure Growth

Per Enrollee Medicaid Expenditure Growth

2014 highlights:



• 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

Medicaid: Growth in Total, Federal, and State & Local Expenditures,

2010 – 2014


6.1%

2.3% 3.8%

5.9%

11.0%

7.7%

-7.2%

-1.7%

6.1%

18.4%

2.9%

21.8%

12.4%

5.5%

0.9%

2010 2011 2012 2013 2014

Total Federal State & local

16%

National Health Expenditures: Distribution and Growth by Type of Sponsor

20% 20%

29% 28%

7% 7%

26% 28%

18% 17%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2013 2014

Distribution by Type of Sponsor

State & localgovernment

Federalgovernment

Otherprivaterevenues

Households

Privatebusiness

-2%

0%

2%

4%

6%

8%

10%

12%

14%

2011 2012 2013 2014

Annual Growth by Type of Sponsor

State & local government Federal government

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

• 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.

Major Findings National Health Expenditure Projections, 2015–24

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).

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40.0

80.0

120.0

160.0

200.0

240.0

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

Private health insurance MedicareMedicaid Uninsured

SOURCE: CMS, Office of the Actuary, National Health Statistics Group.

Health Insurance Enrollment (in Millions)

Historical Estimates Projection

Health Insurance Enrollment

and the Uninsured

Key Findings for 2015 Projected growth by Payer

5.3% 6.4%

8.2%

4.7%

NHE Private HealthInsurance

Medicaid Medicare


• 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.

2015 2016 2019 2024

Key Findings for 2015 Projected Growth by Sector

5.3% 5.1% 5.4%

4.1%

7.6%

NHE Personal HealthCare

Hospital Physician &Clinical Services

Prescription Drugs


• 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.

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.

2015 2016 2019 2024

5.3% 6.3%

5.1% 5.1%

NHE Medicare Medicaid Private HealthInsurance


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.

2015 2016 2019 2024

6.2%

7.9%

5.9% 5.6%

NHE Medicare Medicaid Private HealthInsurance


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

https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/index.html















https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsHistorical.html

















https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsProjected.html
















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