Congressional Budget Office
Presentation to the National Health Policy Conference
The Outlook for Health Care Spending
February 4, 2008
Excess Cost Growth in Medicare, Medicaid, and All Other Spending on Health Care
Percentage Points
Medicare
1975 to 1990 2.9
Medicaid
2.9
All Other
2.4
Total
2.6
1990 to 2005
1.8
1.3
1.4
1.5
1975 to 2005
2.4
2.2
2.0
2.1
Projected Spending on Health Care as a Percentage of Gross Domestic Product
Percent
50 45 40 35 30
All Other Health Care
25 20 15 10 5 0 2007 2012 2017 2022 2027 2032 2037 2042 2047 2052 2057 2062 2067 2072 2077 2082
Medicaid
Medicare
Federal Spending Under CBO’s Alternative Fiscal Scenario
Percentage of Gross Domestic Product
40
Actual
Projected
30
Medicare and Medicaid
20
Social Security
10
Other Spending (Excluding debt service)
0 1962 1972 1982 1992 2002 2012 2022 2032 2042 2052 2062 2072 2082
Federal Debt Held by the Public as a Percentage of Gross Domestic Product Under CBO’s Long-Term Budget Scenarios
400
Actual
Projected
300
Alternative Fiscal Scenario
200
Extended- Baseline Scenario
100
0 1962 1972 1982 1992 2002 2012 2022 2032 2042 2052 2062 2072 2082
Federal Fiscal Imbalance Under CBO’s Long-Term Budget Scenarios
Percentage of Gross Domestic Product
Projection Period Revenues Outlays Fiscal Gap
Extended-Baseline Scenario 25 Years (2008–2032) 50 Years (2008–2057) 75 Years (2008–2082) 20.2 21.3 22.1 19.5 21.9 23.8 Alternative Fiscal Scenario 25 Years (2008–2032) 50 Years (2008–2057) 75 Years (2008–2082) 18.6 18.8 19.2 21.4 24.1 26.1 2.8 5.2 6.9 -0.7 0.6 1.7
Contribution of Aging to the Fiscal Gap Under CBO’s Alternative Fiscal Scenario
Percentage of Gross Domestic Product
8 Pure Effect of Aging Starting from Zero Excess Cost Growth 7 Additional Effect of Aging Within the Scenario Portion of the Fiscal Gap Not Attributable to Aging
6.9
6
5.2
5
4
3
2.8
2
1
0 2008–2032 2008–2057 2008–2082
Medicare Spending per Capita in the United States, by Hospital Referral Region, 2003
$7,200 to 11,600 (74) 6,800 to < 7,200 (45)
Source: www.dartmouthatlas.org.
6,300 to < 6,800 (55) 5,800 to < 6,300 (60)
4,500 to < 5,800 (72) Not Populated
The Relationship Between Quality and Medicare Spending, by State, 2004
Composite Measure of Quality of Care
88
83
78
73 4,000 5,000 6,000 7,000 8,000
Spending (Dollars)
Source: Data from AHRQ and CMS.
What Additional Services Are Provided in High-Spending Regions?
Source: Elliot Fisher, Dartmouth Medical School.
Variations Among Academic Medical Centers
Use of Biologically Targeted Interventions and Care-Delivery Methods Among Three of U.S. News and World Report’s “Honor Roll” AMCs
UCLA Medical Center Biologically Targeted Interventions: Acute Inpatient Care Massachusetts General Hospital Mayo Clinic (St. Mary’s Hospital)
CMS composite quality score
Care Delivery―and Spending―Among Medicare Patients in Last Six Months of Life Total Medicare spending Hospital days
81.5
85.9
90.4
50,522 19.2
40,181 17.7
26,330 12.9
Physician visits
Ratio, medical specialist / primary care
52.1
2.9
42.2
1.0
23.9
1.1
Source: Elliot Fisher, Dartmouth Medical School.
Medicare Advantage Enrollment and Spending is Growing Rapidly
2003 Actual Average Enrollment (in millions) 4.6
2007 Estimate 8.1
2017 Projection 14.3
As share of HI Enrollment (percent)
11
19
26
Spending (in billions of dollars)
33
72
192
Growth in Medicare Advantage and Other Group Plans, by Plan Type
in thousands of enrollees Change: Jan. 2008 Dec 2005 Coordinated care plans Private fee for service Subtotal, MA 5,158 209 5,367 Jan 2007 6,360 1,345 7,705 Jan 2008 7,057 2,062 9,119 Dec 2005 1,899 1,853 3,752 Jan 2007 697 717 1,414
Other Group
755
586
449
-307
-138
Total, Medicare Group
6,122
8,291
9,567
3,446
1,276
Source: CBO
Note: Coordinated care plans includes HMOs, PPOs, and POS plans. Other group includes 1876 cost plans, healthcare pre-payment plans, and demonstrations.
Employer Plans are Driving PFFS Growth
"PFFS plans also are attractive to employers and unions throughout the country, because they can readily provide coverage nationwide, including coverage that is adaptable to seasonal changes in residence. Roughly 15 percent of PFFS enrollment in 2007 derives from employer group and union plans, compared to just 5 percent in 2006. One of the largest additions to PFFS employer group enrollment for 2007 was the Michigan Public School Employees Retirement System, which has close to 100,000 retirees." – Abby L. Block, (Director, Center for Beneficiary Choices, CMS), Testimony on Medicare Advantage Private Fee-For-Service Plans before the W&M Health Subcomm, May 22, 2007
“Dear Provider: Your patient is enrolled in DESERET SECURE, our new Medicare Advantage Private Fee-for-Service plan. Beginning January 1, 2007, Deseret Secure (and Deseret Secure PLUS, which includes a higher prescription drug benefit) replaces all our existing plans for our members on Medicare, including our HCPP and Medicare supplement products." – Letter from Deseret Mutual Benefit Administrators (established in 1970 to serve the employee insurance and retirement needs of employees of the Church of Latter-day Saints).
CBO Health Activities
New Hires and Expanded Staffing
– New deputy assistant director (Keith Fontenot) in the Budget Analysis Division – Health staff agency wide increase from 30 FTEs to 40 FTEs (Plus 6 new hires) – FY 2009 Plans
Reports and Analysis in 2008
– Critical Topics in Health Reform – Health Options