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CMS expects 2003 to mark first slowdown in health care cost growth

Compliance Monitor, February 18, 2004

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U.S. health care spending is projected to grow 7.8 percent in 2003, down from the 9.3 percent growth experienced in 2002, according to a report issued February 11 by the Centers for Medicare & Medicaid Services (CMS).

A slowdown in health care spending growth in 2003 would follow six consecutive years of acceleration, the report says.

Health care spending is expected to continue to grow, reaching 15.3 percent of the Gross Domestic Product (GDP) in 2003, up from 14.9 percent in 2002, according to the report prepared by the CMS Office of the Actuary and published online by Health Affairs.

The slowdown in the health care spending growth rate is primarily attributed to slower rates of growth anticipated for Medicaid and Medicare spending, private health insurance spending per enrollee, and medical price inflation.

The report identifies hospital and prescription drug spending as two areas that will experience slower growth than they have in recent years.

U.S. health care spending is projected to reach $3.4 trillion and 18.4 percent of the GDP by 2013. From 2002 to 2013, health care spending is projected to grow 7.3 percent per year.

The impacts of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), which are not reflected in this set of projections, are anticipated to significantly affect the payers for prescription drugs beginning in 2006, the report says. According to CMS, the impacts of MMA will be assessed in a later report.

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