Analysts forecast 'weak' nursing home Medicaid spending growth

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Nursing home spending is expected to lag the projected 7.0% growth rate of national health spending in the coming years, according to a report in the new issue of the journal Health Affairs.

Medicaid nursing home spending is expected to show growth of 3.4% for 2004, not robust but still more than the 1.0% rate in 2003. It will then rise at faster, yet "weak" rates for the rest of the decade, say analysts from the Centers for Medicare & Medicaid Services, and the National Health Statistics Group.

For 2005 through 2011, Medicaid spending on nursing homes is expected to grow at a 6.1% annual rate, rising to about 6.4% by 2014, the researchers say. The uptick will be due to a "slight" increase in nursing home use by aging seniors. The administration's push to have beneficiaries seek more home- and community-based care, as well as non-elderly becoming a bigger portion of the Medicaid program, will hold down nursing home spending.

Overall, the analysts said they expect the impact of the aging population to have "minimal" impact in the nursing home sector. Medicare will see the biggest impact, with spending there rising from 5.3% growth in 2011 to 6.0% by 2014. Private nursing home spending, meanwhile, is expected to fall from 2008 to 2013 before rebounding at a 4.2% clip in 2014.

Both health spending overall, and the total spent on prescription drugs, aren't expected to rise dramatically over the next decade. But analysts, who include actuaries, warned that the public sector is forecast to be paying for nearly half of the overall bill by 2014. By that time, total health spending is expected to grow to 18.7% of gross domestic product, up from 15.3% in 2003.