Spending on continuing care retirement communities and nursing facilities is projected to accelerate in the next decade, hitting nearly $275 billion by 2024, according to data released this week.
That amount represents consumers’ out-of-pocket spending as well as expenditures from private health insurance, Medicare, Medicaid, other insurance programs and other third-party payers. It was calculated for the annual National Health Expenditure report from the Office of the Actuary in the Centers for Medicare & Medicaid Services (CMS).
Nursing care facility and CCRC spending for this year is projected to be $167 billion. That would be a 4.3% increase from the 2014 projected expenditures of $160 billion.
In the coming years, expenditures are expected to grow even more, plateauing at 5.8% yearly increases between 2020 and 2024.
Increases in out-of-pocket payments are expected to follow roughly the same trajectory, increasing by about 6% each year starting in 2020.
That would bring out-of-pocket payments to about $83 billion in 2024. For this year, out-of-pocket spending is forecast to be $50 billion.
Out-of-pocket spending is expected to account for about a third of total expenditures for CCRC and nursing care each year between now and 2024.
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Medicare spending is predicted to increase most dramatically, with annual increases of more than 8% starting in 2020. That means expenditures would increase from about $38 billion this year to more than $74 billion in 2024.
The aging of the baby boom generation will drive this huge growth in Medicare outlays, and also increase spending for senior care in other settings than nursing homes and CCRCs.
On average, home health care expenditures are projected to grow by at least 6% each year from 2014 through 2024, when it is projected to reach $156 billion.
In terms of overall health care spending, 2014 marked a turning point. After six years of yearly growth that was below 5%, national health spending is projected to have grown 5.5% last year.
That’s in part due to the Affordable Care Act, which has made health insurance more widely available, according to CMS. “Rapid growth” in prescription drug spending also was a factor, the agency stated.
Still, the annual growth rate going forward is expected to be much lower than levels seen in the late 1990s through 2007, according to the CMS Office of the Actuary.
Written by Tim Mullaney