Patients Going to Medicare as Health Costs Rise

The Center for Medicare and Medicaid Services (CMS) issued a report February 20 projecting that total U.S. health care expenditures will rise faster than in recent years, from $3.49 trillion in 2017 to $5.96 trillion in 2027, an average of about 5.5% per year.

Drilling deeper: Physician and clinical services revenue will soar, and the biggest gains in numbers of patients, percentage-wise, will be in Medicare—no surprise as the patient population ages.

The timing of the report coincides with political headlines: Democratic politicians are staking out positions favoring either a “Medicare Buy-In” for patients over 50 or “Medicare For All,” and a coalition of insurers, drug companies, and providers rises to oppose both.

Medicare Is Where the Growth in Patient Numbers Will Be

“…[G]rowth in Medicare spending on physician and clinical services is expected to be faster than growth in private health insurance spending on the sector, largely due to the continued shift of the baby-boom generation from private health insurance into Medicare,” the report says. Medicare spending is projected to rise an average of 7.4% per year—a faster rate than the compared to 5.5% for Medicaid and 5.8% for private health insurance.

The repeal of the individual insurance mandate will cause a small national decline in the percentage of patients covered by private insurance, from about 90.9% of Americans in 2018 to 90.6% in 2019. However, the total percentage of the population with at least some insurance is expected to remain around 90% through 2027.

Prices for health care goods and services are projected to rise a low 2.5% overall, compared to 1.1% for 2014-17.

Healthcare spending will rise faster than the Gross Domestic Product (GDP), and will increase from 17.9% of the economy in 2017 to 19.4% by 2027.

Physician and clinical services
will grow a lot (in billions):

That’s an overall increase of 68.8% in payments to physicians.

The biggest percentage increase in payments to physicians will come from Medicare, the report projects, a 102% increase from $159 billion in 2017 to $321.7 billion in 2027.

The biggest increase in total dollars paid to physicians will be from private insurers, an increase of 71.3% from $567.6 billion to $972.4 billion.

Medicaid payments to physicians will rise 77%, from $75.3 to $128.9 billion.

If you practice in Maine, Nebraska, Utah, or Virginia: Medicaid is being expanded in those states in 2019, offering new sets of patients with ability to pay.

The released federal stats don’t break the data down to orthopedics.

Political Impacts

The projections do not consider some Democratic politicians’ “Medicare for all” proposals and some Democratic presidential candidates “Medicare buy-in at 50″ plans, and variations on the two.

The projections also don’t include the potential effects of the shift to value-based care models such as accountable care organizations (ACOs).

Nor do they account for the increasing role of private insurers in Medicare through Medicare Advantage plans. If current trends continue, these plans, which tend to pay physicians the same as or less than traditional Medicare but with significantly more administrative headaches and slower payments (due to more pre-authorizations and extra data demands before paying claims), could cover half of all Medicare enrollees within the next five years.