Projections of National Health Expenditures: Methodology and Model Specification

摘要

The Office of the Actuary (OACT) in the Centers for Medicare & Medicaid Services (CMS) annually produces short-term (11 years) projections of health care spending for categories within the National Health Expenditure Accounts (NHEA). The NHEA track health spending by source of funds (for example, private, Medicare, Medicaid) and by type of service (hospital, physician, pharmaceuticals, etc.). To produce projections for total National Health Expenditures (NHE), OACT combines projections for Medicare and Medicaid spending (based on actuarial techniques) with projections for private health spending (based on a multi-equation structural econometric model, hereafter referred to as the NHE Projection Model). The NHE Projection Model attempts to capture the causal relationships between major macroeconomic variables and private health spending, as well as interactions among major causal variables within the health sector. The macroeconomic and demographic outlook from the 2007 Trustees Report and the projections of Medicare and Medicaid spending produced by OACT are exogenous inputs into the model. Projections are inherently subject to uncertainty. The models are estimated based on historical trends and relationships in health spending; any structural break in these relationships is generally unpredictable. These projections also rely on assumptions about macroeconomic conditions and health sector parameters and their relationship to health care spending, with the degree of uncertainty increasing along with the projection horizon. Therefore, we qualify our projections subject to these uncertainties and how they might affect our results.