How soon before reform sparks a slowdown in the pace of healthcare spending? About four years, according to new government estimates.
Healthcare spending is expected to accelerate from 2010-2014 before starting to let up in 2015, say the actuaries for the Center of Medicare and Medicaid Services (CMS).
The CMS report projects spending to grow at an average rate of 6.3% through 2019, with the biggest spike (9.2%) occurring in 2014.
The main reason for the expected spike over the next four years: 20 million more people are expected to get health insurance coverage during that time. Not to mention the fact that new provisions — such as the requirement for health plans to extend coverage to adult dependents until age 26 — are expected to boost spending by $10.2 billion by 2014.
When things will slow down
Spending growth isn’t expected to start slowing until 2015 when Medicare providers start seeing reductions in payments.
But the biggest slowdown in spending is expected to take place in 2018, when the excise tax on high-cost (“Cadillac”) insurance plans takes effect.
The report said many employers will lower the value of their health insurance plans in 2018 in order to avoid the excise tax — which is projected to be the biggest contributing factor to the slowdown in spending.
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