NEW YORK — After years of historically slow growth, health care spending is once again on the rise — and it’s expected to continue to accelerate over the next decade.
Thanks in large part to the expansion of coverage under Obamacare, health care spending in the U.S. is projected to have hit $3.1 trillion, or $9,695 per person, last year. That’s an increase of 5.5%, according to federal estimates released Tuesday. It’s the first time the rate would exceed 5% since 2007.
Some 8.4 million Americans are thought to have obtained insurance through the Obamacare exchanges and from the expansion of Medicaid.
Also, prescription drug spending surged to 12.6% last year, its highest rate of growth since 2002. The government cited the debut of high-cost prescription drugs for hepatitis C, such as Sovaldi, as the primary reason behind that jump.
This year, spending growth is expected to slow slightly to 5.3% as these trends moderate. But it will pick up again to an average of 5.8% a year between 2014 and 2024 due, in part, to the improving economy and the aging of the population, with approximately 19.1 million people expected to enroll in Medicare over the next 11 years.
As a share of the economy, the government estimates that health care will account for nearly 20% of the U.S.’s spending by 2024, up from 17.4% in 2013.
Still, health care spending increases remain restrained compared to the past.
“…these projected growth rates are significantly lower than those observed over the three decades prior to the recent recession,” said Sean Keehan, the study’s lead author.
Also, Americans will not likely see such big increases in their personal spending on health care.
That’s because many employer-sponsored and Obamacare plans have high deductibles, which is curbing enrollees’ use of their coverage. Also, insurers are limiting the number of in-network doctors in their plan, which is also keeping costs down, Melinda Buntin, chair of the health policy department at Vanderbilt University’s School of Medicine, wrote in Health Affairs.
The rapid growth of Medicare and Medicaid, however, will weigh even more heavily on the federal budget. Nearly half of total U.S. health expenses will be paid for by federal, state and local governments by 2024, according to federal projections.