U.S. Healthcare Spending On Track To Hit $10,000 Per Person This Year

There’s never a shortage of major healthcare policy events in any given calendar year ‒ and 2015 will be no exception. Here’s a short list of some that are pending and noteworthy ‒ with a few predictions. First up isn’t a prediction as much as a major milestone that’s reflective of escalating healthcare costs.

According to CMS (here) our National Healthcare Expenditure (NHE) is projected to hit $3.207 trillion this year. The U.S. Population is currently hovering at around 320 million, so 2015 looks to be the first year healthcare spending will reach $10,000 per person. We may be “bending the cost growthcurve,” but the per capita amount continues to grow.

As evidenced by this chart, much of that cost is being shifted into high-deductible health plans.
The effect of this, of course, is largely unknown. Proponents of CDHP’s argue that it’s a much needed shift to foster more consumer accountability for healthcare utilization. Opponents argue that we lack the scientific evidence (certainly at this early stage) to know what the real effect is on health and outcomes ‒ and there’s a significant risk associated with healthcare that’s delayed or avoided because of cost. This will continue to be hotly debated well into 2015 ‒ and beyond.

There was a glimmer of hope in 2014 with what appeared to be a viable solution for the Sustainable Growth Rate (SGR), but that deteriorated quickly into yet another series of punts into 2015. Ultimately, there are only three options with the SGR. My first prediction is that the SGR will be punted (yet again) into 2016. This is clearly intertwined with healthcare reform generally ‒ and that’s the next major stop on the 2015 healthcare reform calendar ‒ The Supreme Court.

Once again, the Supreme Court gets another big bite at the ACA apple ‒ and while the ruling won’t be announced until later in the summer ‒ the court will hear oral arguments in King v. Burwell this spring. At risk are the ACA subsidies for the 37 states that sell health insurance on the federally facilitated marketplace (Healthcare.gov). I’m not an attorney, but technically it appears to be a much easier case to decide strictly on the legal language as a technicality.

That’s not to say the Supreme Court won’t consider legal context and/or intent‒ but the legalese appears to favor the challenge ‒ which means that millions could lose their federal subsidy through healthcare.gov. This amounts to a significant setback for Obamacare that a Republican‒led Congress isn’t remotely motivated to help fix (although it could). Attacking Obamacare piecemeal seems to be a viable alternative to outright repeal ‒ and this one has the potential to inflict significant damage on the fiscal incentives tied to the individual mandate. If the challenge is successful ‒ and I’m predicting it will be ‒there will be much more to debate going into the 2016 presidential cycle.

The Children’s Health Insurance Program (CHIP) is also up for renewal in 2015‒ and while I predict it will be renewed ‒ it won’t be for the full 4 years that program advocates would like. Given all the other aspects of healthcare reform (and political debates) ahead, I think we’ll see CHIP renewed for a more modest 2 years (through 2017) which will then provide more metrics for all the political and financial calculations ahead. A September piece in the New York Times gave a good summary view of  the program to date:

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