Has already happened in the discussion about what wages ought to be in this nation. Mary kai henry, president of the Service Employees international union. Our guest on news makers at 10 00 a. M. And 6 00 p. M. Cspan. On wednesday economists with the centers for medicare and Medicaid Services held a briefing on their Health Spending projections. Forecasters say spending will increase in coming years due to the healthcare laws coverage spangss expansions, faster Economic Growth and the growing elderly population. Its an hour. Good morning. Im the editor in chief for the as you know and the reason youre here, with all thats going on in health policy, theres great interest in many aspects of whats changing our healthcare system. Much of that interest has to do with spending, the total levels, whos paying and what they are paying for. Im pleased to continue a tradition of Health Affairs of publicing the projections prepared by the office of actuary in the centers for medicaid and medicare services. They will release a paper we are releasing today and you also have a c. D. With the graphic information that you can use along with the the materials in the paper. Youre going to hear today from representatives of the office of the actuary andrea cisco will kick us off. John poisal, Deputy Director of the National HealthStatistics Group in the office of the actuary will be helping field the questions that you may have. Im sure you know this is the product of a team and a tremendous amount of effort goes into the projections. They are of great value to policy makers. So its my pleasure to turn it to andrea to begin the presentation. Thank you for being here. Thank you for your interest in our work. Before i get started, id like to take an opportunity to thank Health Affairs for their work and help in helping us to prepare this publication and also for planning todays event. Id also take to take an opportunity to recognize all of the folks in the offices of actuary who contributed to the report, many of whom are in the audience today. Thank you all. Now for what youve all been waiting for, ill begin with an overview of our major findings. Health spending growth in 2013 is expected to have remained slow at 3. 6 . This would be the fifth Consecutive Year of growth under 4 . The slow projected rate of growth is due to the sluggish economic recovery, lower payment growth to medicare, as well as continued slow growth in the utilization of medicare services, as well as continued increases in private Health Insurance costsharing requirements, including continued increases in the deduction of High Deductible Health plans. Faster economic groit and population ageing are expected to contribute to faster projected Health Spending growth and in particular for 2014 we project a growth rate of 5. 6 and for 2015 through 2023, 6 per year on average. Although Health Spending growth is expected to pick up, the average rate of growth is slower than experienced over the last two decades. Over the full projection period, Health Spending growth is projected to grow 5. 7 per year on average and outpace Economic Growth by 1. 1 Percentage Points on average. The growth of Gross Domestic Product is expected to rise to 19. 3 by 2023. And before we get further into our results, id like to provide a bit more background and context for our projections and touch on a few key meth logical points. Our projections are developed using actuarial technique and in accordance with the specific spending and enrollment impacts of the Affordable Care act, particularly the coverage expansions were estimated using recent and updated version of the offices of shoe ware. The projections are produced in a manner consistent with the projected baseline scenario of the 2014 medicare report and medicare reports are projected to grow as opposed to the scheduled growth set by the growth rate formula and current law. After this include this includes a reduction of 21 on april 1st of 2015. If you would like any further information about our model methodology, please see end note one in our paper. We provide a citation, the web location and the updated version that applies to this set of projections will be available when the embargo lifts. Okay. In this chart we put into context the relationship between Health Spending and Economic Growth. Namely, the effective economics on projected Health Spending is an overoftening theme of our paper. And as you can see looking at nh. E growth and they have been growing at similar rates since 2010 and they are projected to do so in 2013 as well. Nh. E. Growth is projected to ak set rate in 2014 due to the coverage expansions under aca. The relationship between Health Spending and Economic Growth, Health Spending tends to respond to changes in Economic Growth with lag, becomes more evident. While projected Economic Growth reaches a peak in 2018, we project n. H. E. Growth will this reflects the effect of faster enrollment by the baby boom generation and faster growth as the population ages. So taking over the entire projection period, nh. E. Growth is predicted fastest than gdp. To translate those growth rates into the effect of the purple line on the chart because they have been growing at similar rates in 2010 and expected to do so again for 2013, the health share of gdp has remained stable since 2010 and is projected to do so in 2013. In 2014 and after, the health share is expected to rise as projected nh efshgs further outpaces Economic Growth due to the ekt of the coverage expangs, faster Economic Growth and the aging population. Over the period, the health share of gdp is projected to rise from 17. 2 in 2012 to 19. 3 by 2023. And, again, to help put the projected acceleration in nhe growth into context, its important to remember in other of our major findings while growth is projected to accelerate, those growth rates are slower than exexperienced over the last two decades. Projected Health Spending growth is slower on average over the entire projection period by 1. 5 . Thats comparing the aqua bar through 2008, a growth rate of 7. 2 , to the 5. 7 per year on average growth rate for the projection period. In addition, its also important to note that the projected growth during the key time periods of acceleration are also slower than experienced over the last two decades. And so that would be for 2014 and 2015, the first two years of the Affordable Care act coverage expansion as well as over 2016 through 2023 period, due to the ekt of faster projected Economic Growth and the effect of population aging. Over the next three slides ill provide a high level overview of our findings by service and good, payer and sponsor. Shawn will take you through a more detailed look over the second half of the presentation. By servicing good, the distribution of Health Spending is not expected to change much over the projection period. With the projected shares of Health Spending devoted to the three largest sectors, hospitals shs physician and Clinical Services and prescription drugs, remaining the same by 2023. How we arrive there in terms of projected spending growth during each time period for the Major Services, however, does differ. So following continued projected slow growth in 2013, spending for each of the major sectors is projected to grow faster in 2013. Continued robust spending growth is expected for the Major Services over the remainder of the projection period, due to the continued effect of the coverage expansions, faster Economic Growth, the ages of the population and for drugs higher expected use of specialty drugs. The exception is the projected slowdown in growth for physician and Clinical Services in 2015. This is attributable to the expiration of increased medicare payments for physicians and lower payments to Medicare Advantage plans. Now for our trends by payer. The effect of the coverage expansions starting in 2014 and the aging of the population are two key trends that are evident in the projected spending trends by payer. The availability of expanded coverage through medicare in states that choose to participate is expected to increase in the medicare Health Spending by two Percentage Points to about 18 . Despite the presence of new enrollment in private Health Insurance plans through the coverage expansions and faster Economic Growth driving faster private Health Insurance spending growth in 2014 and after, the aging of the baby boom generation out of private Health Insurance and into medicare is expected to result in a decline in the private Health Insurance share of Health Spending from 33 to 32 . Correspondingly, the medicare share spending is projected to increase from 20 to 22 over the projection period. Additionally, the share of the population comprised of medicare enrollees is expected to rise as well from 15. 8 to 19. 8 over the projection period. And reflecting the effect of both expanded coverage and the transition of the baby boom generation into medicare, out of pocket spending is projected to decline in share of total Health Spending from just under 12 in 2012 to just under 10 by 2023. And finally ill take you through the trends by sponsor. And again here the effect of the coverage expansions and the aging of the population play a major role it felt coverage expansions through medicare, the 90 to 100 federal matching rates for states that expand coverage and premium and cost sharing subsidies for marketplace plans are expected to increase the share of Health Spending sponsored by the federal government over the projection period. These factors are expected to contribute to the decline in the household share of spending over the period. Also contributing to the increase in the federal share and the decline in the household share is the shift of the baby boom generation into medicare. It also plays a finally, by 2023 the share of Health Finance by federal state and local governments is expected to rise to 48 of Health Spending from 44 in 2012. And with that ill turn the presentation to shawn, who will take you through the key findings by time period. Thank you very much. I want to thank everybody in the room or anybody watching on tv for their interest in our work. We appreciate it. Were happy to answer any questions that you guys have. Id also like to thank Health Affairs for their help in give getting this paper published. Weve had a great relation with Health Affairs. I wanted to point out one thing which i sthi a new innovation that at least i havent seen before. If you look at line charts and economic writings, you see recession bars all the time. For the first time that i have seen, you see a recovery bar. Ill discuss the significance of this in my first slide. Alen, thank you and your staff. So then you mention im going to break this period into three time periods. And the first time period is 2013. The first thing i want to mention is 2013 is still a projection. In the a few months our office will come out with historical estimates on Health Spending. Until that happen, 2013 is a projection. We are projecting 3. 6 Health Spending growth in 2013, which would mark the fifth Consecutive Year of growth under 4 . Gdp growth is estimated for 2013 at 3. 4 . And so since these growth rates are similar, this would mean that the share of gdp or the health share of the economy is projected to remain constant in 2013 at 17. 2 . Now, heres where i want to bring back in e 2 and the value of it in that andrea mentioned the important relationship between Health Spending and Economic Growth. This exhibit shows the recovery for each of the last two recessions. In 2013, the fourth year after the recession ended, it was 3. 4 . In nongdb was higher in the n each of the last two recessions. Its important in that its not primary think recession. Its really the recovery from the recession that has been slower for this recession than past recessions, which is one factor laid to slower healthcare spending. Now ill break out 2013 by payor. For medicare were expecting growth at 3. 3 . This is as a result of Slower Growth utilization across owl services. Lower payments of 2 begin in april 2013 that was included in the budget control act of 2011. For medicaid, were expecting growth of 6. 7 . Sh th slide gives a four Year Growth Rate so it masks the acceleration. The faster acceleration part of it was due from a rebound of a 2012 low. But the other part of it was aca man date temporary payment increase to primary care physicians that was one factor in the higher spending growth projected for medicare. For private Health Insurance, were expecting low projected growth of 3. 3 . And this has to do with continuing increase in requirements in addition to having more people and higher deductible health plans at the time in an environment of lower Economic Growth. And as far as by sector, for hospitals, growth is projected to slow to 4. 1 . This is due to medicare yutrylization. Medicare is affected by sequestration. The reason for the slowdown, the primary reason is different in that we are projecting that growth in prices for physician and Clinical Services will be the slowest in 2013 since 2002. So slow price growth was the main reason for the slowdown in physician and Clinical Services spending. For prescription drugs were expecting acceleration of 3. 3 . This is coming off of a low of 0. 4 in 2012. Here, its really a rebound off the 2012 low, which as many know was mainly due to a large number of topselling brand name drugs that lost patent protection in 2012. So the impact was felt in 2012. That kept spending growth down in 2012. So in 2013 there were some additional brand name drugs that lost patent protection. There was an a dollar value of drugs that lost patent projection. Thats the primary reason for the acceleration. The next period 20142015, which are the two years that youll see the major impact of the coverage expansions. For medicare and private Health Insurance, higher growth is of 12. 8 for medicare and medicaid and 6. 8 for private Health Insurance for 2014 is due to higher use as a result of the covered expansions where were expecting a reduction of 9 million in 2014. In 2015 were expecting additional 8 million reduction in the uninsured which will keep private Health Insurance growth strong at 6. 9 . For medicaid were projecting a slow down in growth of 6. 7 where the increase in coverage, the further increase in the coverage expansion high enrollment is projected to be Something Like thatly offset by the expiration of the temporary increase in payments to medicare excuse me to medicaid primary care physicians. So for out of pocket, we are expecting negative growth in 2014 and then low growth in 2015 as a result of the coverage expansions, people moving from uninsured where they pay 100 out of pocket to to having Insurance Coverage and some of that Insurance Coverage is going to have costsharing subs which further reduces the out of pocket burden. For medicare we are expecting continued growth in which is keeping growth slow. But in 2015 were projecting a further deceleration of 2. 7 and the deceleration is partially attributable to lower payments to Medicare Advantage plans. Now, by sector in this period, hospital is projected to gradually accelerate to 4. 5 in 2014 and 5. 1 in 2015. And this is as a result of increase in use due to coverage expansions. For physician and Clinical Services the acceleration is predicted to be 5. 9 . People that gain coverage through coverages they are expected to use more physician and Clinical Services than hospital care as they get use of their new coverage. For 2015, though, growth is projected to deceler