Home Health Spending Rate Projected to Surpass All Other Care Categories

Roughly $108.8 billion is projected to be spent on home health care in the United States in 2019, according to a newly released analysis from the Centers for Medicare & Medicaid Services (CMS) Office of the Actuary.

U.S. expenditures on home health care are projected to hit $186.8 billion by 2027.

An aging population, a rise in chronic conditions and a growing belief among policymakers that the home is the ideal care setting has likely contributed to home health care expenditures climbing faster than those in most other health care categories since 2013.

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In 2019, the annual growth rate for home health spending is projected to be 6.8%. That’s at the very top of list, easily outpacing nursing care facilities and continuing care retirement communities (CCRCs), along with hospitals.

The overall national health expenditures growth rate for this year is 4.8%. Office of the Actuary findings were highlighted in a study published by Health Affairs on Wednesday.

“As a result of economic and demographic trends, we expect health spending growth to increase over this next decade,” Andrea Sisko, an economist in the Office of the Actuary at CMS and lead author of the Health Affairs study, said in a statement. “While Medicare spending is expected to accelerate the fastest among payers and contribute to the increase, growth in health prices and disposable personal income are also significant contributors.”

National health expenditure growth is expected to average 5.5% annually from 2018 to 2027, reaching nearly $6.0 trillion by 2027.

That growth is anticipated to be faster than projected growth in gross domestic product (GDP) by 0.8 percentage points over the same period. Based on those projections, that would mean health care’s share of GDP would rise from 17.9% in 2017 to 19.4% in 2027.

Medicare spending growth is projected to average 7.4% from 2018 to 2027, the fastest rate among major payer sources.

During the same timeframe, private health insurance spending growth is projected to average 4.8% — slowest among major payer sources. That’s partly due to slow enrollment growth related to the baby-boomers transitioning from private coverage into Medicare, according to researchers.

In terms of other senior care categories, spending for nursing care and CCRCs is expected to reach $270.7 billion in 2027. Spending for “other health, residential and personal care” is projected to be $318.6 billion that year.

Findings were based on a mix of actuarial and econometric modeling methods, as well as judgments about future events and trends that are expected to influence health spending. They are largely based on economic and demographic assumptions in the 2018 Medicare Trustees Report, updated to reflect more recently released macroeconomic data, researchers noted in Health Affairs.

The projections reflect current laws and do not reflect any policy proposals currently under consideration. It is unclear whether that includes the Patient-Driven Groupings Model that the home health care industry now faces.

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