Annual Report 2014

While health care cost growth has slowed in the years following the recession, the United States spent roughly 16.4 percent of national gross domestic product (GDP) on health care in 2011, and the Congressional Budget Office has estimated that federal health care spending will increase to 8 percent of federal revenue by 2038.[1] The United States spends more per capita on health care than any other country in the world and the gap widens year after year.

Appropriately, health care market reforms have long been a priority on Capitol Hill, resulting in legislation such as the Balanced Budget Act of 1997, the Medicare Prescription Drug, Improvement, and Modernization Act (2003), and most recently the Patient Protection and Affordable Care Act (2010). These legislative initiatives and other policy efforts have largely been focused on reducing the budgetary burden of public health programs to the federal government and expanding coverage in terms of benefits and percent of the US population that is insured. The Center for Health and Economy (H&E) uses a detailed micro-simulation model to analyze the ten-year outlook of the insurance market for US residents under the age of 65, providing more robust metrics  that can be used to inform policy decisions. This report details the H&E projections of the insurance market and the characterizing metrics.

Note on the Implementation of the Affordable Care Act:

The predictions detailed in this report are sensitive to the implementation of the Affordable Care Act (ACA). H&E does not have the analytical capability to make projections about the success of the rollout exchanges and the rate at which members of the individual market will shift into the state-based health insurance exchanges. The model currently employed by H&E assumes perfect implementation and full enrollment of eligible consumers in the individual market in 2014. Given the complications and obstacles in the first few months of enrollment, this assumption is not likely to be valid until 2015 or later. H&E will release a revised analysis after the first open enrollment period is complete.

Key Findings

  • The population of insured US residents under 65 years of age is projected to increase by 25 million in 2014, bringing the percentage of insured, non-elderly Americans to 87 percent.
  • Average Silver plan premium spending (including subsidies) for a family is estimated to be 76 percent less than comparable plans in the current individual market and 48 percent less for single coverage in 2014. However, the average total premium cost (not including subsidies) for those plans is projected to increase by 18 percent for singles and 8 percent for families.
  • The average premium and cost-sharing subsidy for eligible exchange enrollees will be roughly $8,620 and cover 79 percent of the cost of average Silver plan family coverage.
  • In 2014, the federal government will spend an estimated $234 billion on premium and cost-sharing subsidies.
  • Medical productivity is projected to increase slowly at 0.5 percent per year.
  • Provider access for insured patients is expected to decline by roughly 10 percent over the next decade.


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