Home Health Spending Outpaces Other Health Care Spending

WASHINGTON, D.C. (February 26, 2019)—In the Feb. 22, issue of the NAHC Report, the National Association of Home Care & Hospice broke down a recent Health Affairs study. Health care spending in the United States is expected to rise to nearly $6 trillion by 2027, but home health spending will rise faster than all other care categories, according to a new projection from the Office of the Actuary of the Centers for Medicare & Medicaid Services (CMS).

“As a result of economic and demographic trends, we expect health spending growth to increase over this next decade,” said economist Andrea Sisko of the National Health Statistics Group and lead author of the Health Affairs study. “While Medicare spending is expected to accelerate the fastest among payers and contribute to the increase, growth in health prices and disposable personal income are also significant contributors.”

Speaking to reporters during a media teleconference on Feb. 20, Sisko said that long observed “key economic and demographic factors fundamental to the health sector are anticipated to be the major drivers of healthcare spending and coverage trends over the projection period.”

Those key factors driving the increase in health care spending are an aging baby boomer demographic moving into Medicare, a 2.5 percent increase in prices for medical goods and services through 2027 (a significant increase from the 1.1 percent rate of growth from 2014-2017), and continued growth in the economy and employment.

While almost $109 billion will be spent on home health care in the United States in 2019, that amount is expected to rise to almost $187 billion by 2027, according to the actuarial report. Those increases are driven by substantial year-over-year growth, with a 6.8 percent rise in home health spending projected in 2019 and a 7 percent increase for 2027. That’s in comparison to national health care spending, which is expected to grow 4.8 percent in 2019.

No other sector of the health care continuum is expected to grow as fast as home health.

Government spending is expected to pay for 47 percent of national health care spending, up from 45 percent in 2017. “This increase is entirely accounted for by an increase in the federal government’s share, which largely reflects faster growth in Medicare spending as the baby-boom generation continues to transition into the program,” Sisko said.

Medicare is projected to grow 7.4 percent, higher than Medicaid’s 5.5 percent growth or the 4.8 percent growth expected for private health insurance.

Out-of-pocket expenditures are projected to grow at an average rate of 4.8 percent through 2027 and to represent almost 10 percent of total spending by 2027, a fall from 10.5 percent in 2017.

Click here to access the Health Affairs article and visit nahc.org for more information.