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Medicare Compliance & Reimbursement

Costs:

Spending Growth Peaked In 2002, CMS Predicts

Published on Wed Feb 18, 2004

But another peak might not be far off, and that's bad news for Medicare.

When all the data are in, the health-care spending growth rate will turn out to have slowed in 2003, according to the annual projection by Centers for Medicare and Medicaid Services actuaries.

Health-spending growth for 2003 is projected at 7.8 percent, down considerably from 9.3 percent in 2002, the analysts write in a paper published on the Web site of the journal Health Affairs.

State limitations on Medicaid spending in response to revenue problems, the expiration of some Medicare added payments, plus modest decelerations in the growth of both hospital and prescription-drug spending accomplished the slowdown, which followed six years of accelerating growth.

The trend of slowing cost growth actually began in 2002, say the actuaries, who report that growth in personal health spending slowed in every sector except for hospitals in that year. One major reason for the slowdown at this juncture is that slowed health-care spending growth generally lags an overall economic and wage slowdown by a few years, the analysts note.

While growth in health-care spending always raises questions about where the money is to come from and whether the spending rate is sustainable, it's fully taxpayer-supported Medicaid, which also affects many of the country's most vulnerable people, where those questions may seem most acute.

Medicaid spending is projected to grow at 7.5 percent in 2003, down from 11.7 percent in 2002, according to the analysis. Medicaid enrollment is projected to grow at 3.9 percent, down from 5.9 percent the previous year.

"Despite this temporary dip, we expect Medicaid growth to accelerate again staring in 2004, peaking at 9.2 percent in 2006 and 2007 and then slowing to 8.3 percent by 2013," the analysts write.

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