WASHINGTON, Feb. 21 (UPI) -- In the next decade U.S. healthcare spending will continue a steady, steep climb, according to the latest government forecast.
But as total healthcare spending doubles to account for 20 cents of every dollar spent by 2016, there will be a change in who pays.
"As the nation moves from more traditional sources of insurance, such as employer-based coverage, to more federal- and state-provided healthcare, we will continue to face tough questions about how we finance our healthcare bill," John Poisal, deputy director of the National Health Statistics Group at the Centers for Medicare & Medicaid Services, told reporters at a news conference Tuesday.
The 500-pound Medicare Part D gorilla is responsible for many of the changes, but there will also be increases in consumer out-of-pocket costs as employers ask workers to pay a larger portion of the overall healthcare tab, Poisal and co-authors write in an article appearing Wednesday in the journal Health Affairs.
As in past projections, the good news is that the growth rate of healthcare spending is expected to hold steady at 6.9 percent, a veritable snail's pace compared to the double-digit growth seen in the 1980s.
The bad news is that 6.9 percent of a huge number -- in this case $2.1 trillion -- is still a formidable sum. If the growth rate does not decrease, total U.S. healthcare expenditures will be $4.1 trillion by 2016.
Prescription-drug spending is also projected to double, reaching $497.5 billion by 2016. But after the launch of the Medicare Part D prescription-drug benefit, seniors and states will be paying less and the federal government will be paying more.
Before the launch of the benefit in 2006, Medicare paid for only 2 percent of prescription-drug spending. After the launch, Medicare's share grew to 22 percent. As a result of Medicare's increasing share, there are complementary decreases in Medicaid and consumer out-of-pocket drug spending.
That increased drug spending will help drive total Medicare spending to $862.7 billion by 2016, while fueling a one-time 36-percent drop in Medicaid spending.
It will also help fuel a 6-percentage-point decrease in the overall share of drugs purchased out of pocket, because many seniors in Part D had no prescription-drug coverage before they joined, the article's authors write.
The shift to Medicare drug spending is not necessarily a bad thing and could actually contribute to a slowdown in drug price growth, Poisal said, because the agency contracts with private health plans that negotiate lower drug prices with manufacturers.
When individuals have to pay out-of-pocket for drugs, "there's no one negotiating on (their) behalf for a lower price," he said.
The private drug plans have not, however, managed to match the low drug prices paid by state Medicaid programs before their beneficiaries were moved to Part D, according to the article.
The shift in prescription-drug spending will not spare consumers rising out-of-pocket costs, the projection predicts. Employers have absorbed years of double-digit premium growth, passing on only a small share of the increased cost to employees in the form of higher premiums and co-payments. But employers' willingness to continue to do that is waning, and consumers will experience that in the form of higher out-of-pocket costs even if they have private insurance.
Between 2006 and 2016, consumer out-of-pocket spending is expected to increase from $250.6 billion to $440.8 billion.
Experts caution against taking comfort in the steady 6.9-percent growth rate.
"The picture has not changed," Henry Aaron, a senior fellow at the Brookings Institution, told United Press International. "We're still going up pretty fast."
The rapid growth of healthcare technology combined with an aging population means that trend is likely to continue, he added.
"None of the fundamentals have changed," agreed Joseph Antos, a health economist at the American Enterprise Institute. "We are still saddled with an inefficient healthcare system."
