NCPA - National Center for Policy Analysis

Nation's Health Care Costs to Nearly Double By 2020

July 29, 2011

The federal health law, which will expand coverage to 30 million currently uninsured Americans, will have little effect on the nation's rising health spending in the next decade, says a new report by the Medicare Office of the Actuary, reports Kaiser Health News.

  • The report estimates that health spending will grow by an average of 5.8 percent a year through 2020, compared to 5.7 percent without the health overhaul.
  • With that growth, the nation is expected to spend $4.6 trillion on health care in 2020, nearly double the $2.6 trillion spent last year.

In 2014, when the major coverage expansions of the health law begin to take effect, national health spending is expected to grow 8.3 percent, according to the new analysis.  But spending growth should return to its 6 percent historical average from 2015 to 2020 as some employers drop coverage and the so called "Cadillac tax" on high-cost insurance plans takes effect in 2018.

  • The number of Americans with employer-sponsored insurance will grow from 163 million last year to 170 million in 2014, the report estimates.
  • But by 2020 that number is expected to drop to 168 million as a result of two factors: Baby Boomers joining Medicare and employers dropping health coverage for workers.

The Congressional Budget Office estimates that, by the end of the decade, 3 million fewer people will get health insurance from their employer.  That's slightly more than the Office of Actuary prediction, says Kaiser.

Source: Phil Galewitz, "Nation's Health Care Bill to Nearly Double By 2020," Kaiser Health News, July 28, 2011.

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