Spending on Nursing Care to Increase Steadily Through 2026

Annual expenditures on skilled nursing care will increase by 3.9% this year and keep rising through 2026, according to a new study from the Centers for Medicare & Medicaid Services (CMS) Office of the Actuary.

This rise in nursing home spending tracks with overall gains in outlays for health care services: Between 2017 and 2026, national health care spending will rise 5.5% each year. That’s a gain from the 3.8% increases each year from 2008 to 2013, according to the study, which appears in the March 2018 issue of the journal Health Affairs.

“Over the period, projected increases in the use and intensity of care contribute to rising growth in Medicare per-enrollee spending relative to recent nearly historic lows,” the authors — led by CMS economist Gigi A. Cuckler — wrote in the study.

The CMS team also pointed to the aging population’s growing strain on Medicaid, which over the next eight years will consist increasingly of “relatively more expensive aged and disabled beneficiaries who tend to have disproportionately higher use and intensity of care provided relative to non-aged or non-disabled beneficiaries.”

The recent Republican-led tax overhaul will additionally take a toll on health care spending by reducing the number of people with health insurance: By 2026, the researchers estimate, about 89.3% of the population will have some kind of health coverage, down from 91.1% in 2016. Under the new tax structure, taxpayers no longer have to pay penalties for not having health insurance, as they did under the Affordable Care Act, which could prompt some to ditch coverage.

The researchers cautioned that they did not fully incorporate potential economic changes stemming from the 2017 tax overhaul, and noted that the increase in spending is still below the 7.3% gains seen between 1990 and 2007.

Skilled nursing stats

Spending on skilled nursing facilities — which also includes services received at continuing care retirement communities (CCRCs), will increase more rapidly as the next eight years go on: After a projected gain of 3.9% this year, the annual increase will hit 4.8% by 2020 and 5.3% by 2026. That translates to an increase of $261.0 billion for 2026 as compared to 2020.

“The aging of the population is projected to influence trends in spending for the major payers, predominantly through enrollment — with projected enrollment shifts to Medicare mainly from private health insurance,” the researchers noted.

Written by Alex Spanko

Alex Spanko on Twitter
Alex Spanko
Alex covers the skilled nursing and reverse mortgage industries for Aging Media. Outside of work, he reads nonfiction, yells at Mets games from his couch, and enjoys pretty much any type of whiskey or scotch — often all at once.

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