Medicare expenditures are expected to exceed $1 trillion despite the end of the COVID-19 public health emergency this year, the associated expirations of the skilled nursing facility three-day stay rule waiver and the 20% payment increase for inpatient COVID-19 admissions, according to estimates released Wednesday by the Office of the Actuary at the Centers for Medicare & Medicaid Services.
Medicare spending growth is projected to accelerate from 4.8% in 2022 to 8% in 2023, according to the study, which also will appear in the July issue of the journal Health Affairs.
Meanwhile, national health expenditures, or NHE, are projected to grow 5.4%, on average, over the course of 2022 to 2031, according to the estimates. The numbers anticipate “an increase of the NHE as a share of [gross domestic product] to 19.6% by the end of the projection period,” Sean Keehan, an economist in the actuary office and the Health Affairs study’s first author, said Wednesday during an online media briefing.
“The insured share of the population is projected to be 92.3% percent for both 2022 and 2023 from gains in Medicaid as well as marketplace enrollment,” Keehan said. “After 2023, we are projecting lower Medicaid enrollment, but we are projecting that many of those people will already have comprehensive coverage from another source, such as an employer.”
“Average NHE is expected to outpace average growth in non-NHE by an average of 0.8 percentage points, leading to a health spending share of GDP getting up to 19.6%,” Keehan said.
The Office of the Actuary believed that it was important to look at the effects of some of the COVID-19-related funding over the projection period, “because it had such a large role in the last two historical years,” he said. What the experts found was that a decrease in federal spending after 2022 and 2023 will have little effect on the last eight years of the projection period.
Over the full projection period, average annual Medicare spending growth is projected to be 17.5%, according to co-author Jacqueline A. Fiore, also an economist in the Office of the Actuary. That is the highest projected average among the major payers in 2022, she noted.
“The growth in Medicare enrollment is partly attributable to the last of the baby boomers enrolling in the program through 2029,” according to the Health Affairs paper. Baby boomers were born between 1945 and 1964, and the youngest of them will turn 65 in 2029.
Private health insurance spending is expected to grow 5.4% annually, whereas Medicaid’s average rate of spending growth is projected to be 5% during the same period, according to the study.
“As the public health emergency comes to an end in 2023, the unwinding of many of these impacts will affect projected trends. The insured share of the population is expected to have reached new highs in 2022 and 2023 before falling somewhat with the expiration of pandemic-related legislation that provided a health insurance safety net for many,” the authors concluded.
