Growth in nursing care expenditures to rise along with national healthcare spending patterns, analysis finds

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National health expenditures on nursing care facilities and continuing care retirement communities are expected to increase by nearly 70% in the next nine years, according to a new Health Affairs analysis of spending trends.

By 2022, national health expenditures are expected to be around $264 billion a year on nursing care facilities. That's compared to the $157 billion expected to go toward SNFs and CCRCs in 2013.  

Recently, Medicare outlays have grown modestly. The category is projected to grow 4.2% in 2013, down from 2012, because of the 2% reduction in Medicare provider payments under sequestration. Restrained Medicare payments factors in “slower growth in the use of Part A services, particularly skilled nursing facility and home health services,” the report notes. 

Medicare spending is expected to increase from 2015 to 2022, as more baby boomers move into the program. Growth in Medicare spending will accelerate between 2019 and 2022, as boomers continue to enroll and 2% sequestration cuts end. This will be “primarily responsible” for faster average growth in total health spending for the end of the projection period as compared with earlier years, the report states.

Home healthcare is expected to outpace other categories, with 7.5% average annual growth between 2015 and 2018 and 8% average annual growth anticipated for 2018-2022.

At the same time that aging boomers will increase Medicare outlays, Medicaid rolls will swell due to expansions under the Affordable Care Act. Federal funds will also go to premium and cost-sharing subsidies for policies offered through health insurance exchanges. 

The analysis authors are affiliated with the CMS Office of the Actuary. Unlike prior projections, these take account the 2012 U.S. Supreme Court ruling that made Medicaid expansion voluntary for states, and assume that Medicare physician payments will not be reduced, as called for by the Sustainable Growth Rate formula. The projections draw on the 2013 Medicare Trustees Report.