It Begins: Healthcare Costs Start to Soar

Paul Howard and Yevgeniy Feyman write:

Just in time for the next presidential election, health care spending is starting to take off again. Through 2024, health care spending is projected to grow by 5.8% annually, on average, according to CMS. While this isn’t unexpected—health economists across the political spectrum expected health care costs to start growing again (and growth rates are expected to still be lower than the long-run average)—the window for addressing health care costs in a less painful way is closing...

The big drivers of spending growth will, unsurprisingly, be Medicaid and Medicare.  Even as per-capita costs in these programs grow relatively slowly—averaging just around 4% through 2024—greater enrollment in the two programs will drive spending: 7% for Medicare, thanks to a retiring cohort of baby boomers, and around 6 percent for Medicaid, mainly due to the ACA’s Medicaid expansion...

Don’t forget the remaining 60% of America’s health care economy. Per capita costs in private insurance are slated to grow 4.7% through 2024, on average; in recent years, the growth rate averaged only 2.8%.