Slowdown in healthcare spending is likely over, feds say

Slowdown in healthcare spending is likely over, feds say

The historic slowdown in healthcare spending appears to be coming to an end, according to federal data released Tuesday.

The amount of money spent on healthcare in the U.S. rose 5.5 percent last year, marking the biggest jump in six years. The data also shows that the growth is likely here to stay, with costs expected to rise each year through 2024. 

This would end several years of lower-than-expected spending levels during the recession, which have been highlighted by the Obama administration as proof that it has helped control healthcare costs.

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Healthcare spending is again accelerating, with millions more people insured under ObamaCare and several extremely pricey speciality drugs hitting the markets.

Spending is expected to rise 5.8 percent over the next decade and reach about $5.5 trillion by 2024, according to a report by the Office of the Actuary in the Centers for Medicare and Medicare Services.

That’s far more than last year’s estimated spending of $3.08 trillion, which includes all government, business and household spending on healthcare. The semi-annual figures are considered among the most trusted figures in estimating U.S. healthcare costs. 

While historically low rates of healthcare spending increases are likely over, government economists say growth is still less than what's been seen in the past.

“The rate is still slower than what we’ve observed over the last several decades before the recession,” said Sean Keehan, an economist who led the CMS report.

Spending on prescription drugs alone increased 12.6 percent last year, compared to the 2 percent growth the previous two years.

Keehan attributed the sharp increase to an extremely expensive new drug to treat hepatitis C.

Prescription drug spending is expected to rise by 7.6 percent in 2015, which Keehan said will reflect efforts by insurance companies to negotiate with drug companies to lower the price of that drug as well as others that are new to the marketplace.

Like the Congressional Budget Office, the actuary report does not estimate how much ObamaCare contributed to the spending growth.

“Over the past few years, we’ve stopped giving a pre-ACA prediction and a post-ACA prediction,” Keehan told The Hill.