New reports signal health care costs for this decade

Health care will cost slightly more than previously predicted, according to new estimates by Medicare's actuary. Spending this decade could increase 6.3% annually as health care reform legislation is implemented, according to the report published in Health Affairs.

The Centers for Medicare and Medicaid Service's Office of the Actuary report stated that total national health spending is estimated to have grown 5.8% in 2009 and to have reached $2.5 trillion. This year, spending is expected to grow 5.1%, 1.2% faster than previously estimated because of changes in law and regulations.

For 2011, national health spending is projected to grow at 4.2%, or 1% slower than prior CMS projections. This was attributed to changes to the Medicare sustainable growth rate system, which postponed a 21.3% pay cut until December 2010, as well as changes to COBRA premium subsidies, high-risk pools and care for dependents less than 26 years old. These provisions are estimated to increase national health spending by $10.2 billion through 2013.

Insurance expansions set to take effect in 2014, such as expanding Medicaid coverage and state health insurance exchanges, are expected to increase national health spending 9.2% in 2014. Prior to health care reform's passage, health care spending was estimated to grow 6.6%.

For 2015-2019, health care spending is now projected to increase 6.7%, or 0.1% less than previously projected. Expanding coverage will create relatively faster spending growth rates through 2016 and then slow from reductions to Medicare provider payment updates and an excise tax on high-cost insurance plans starting in 2018.

By 2019, 92.7% of the population will have health insurance, 10% more than without health reform.

In other news, USA Today reported that health care spending this year grew at its slowest rate in a half-century, a sign that people are forgoing medical care during the recession.

The paper mined government data and concluded medical spending increased at its slowest pace on record, a 2.7% annual rate per person in the first half of 2010. After inflation, that's a 0.2% decline in the first six months of 2010.

Americans spent 1.6% less on prescriptions per person after adjustment for inflation. This reflects not only the recession, but more use of generics and insurers' abilities to negotiate lower prices. Hospitals saw a 1.1% drop in patient spending, which the American Hospital Association attributed to patients and the economy.