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Dental spending growth projected through 2021

Affordable Care Act factored in with 'uncertainty'

June 12, 2012

By Craig Palmer, ADA News staff

Bethesda, Md.—Dental spending is projected to increase at an average annual rate of 5 percent through 2021, government analysts said in a June 12 report.

Total health spending is projected to grow at a slightly higher 5.7 percent annually or 0.9 percentage point faster than the expected growth in the gross domestic product (GDP). The growth rate accelerates in 2014 with expanded coverage under the 2010 Affordable Care Act. However, the ACA will add just 0.1 percentage point to overall and dental spending through 2020, aging baby boomers seen as a greater contributor to spending growth.

New estimates from the Centers for Medicare & Medicaid Services’ National Health Expenditures team project an increase in expenditures for dental services from $104.8 billion in 2010 to $179.8 billion in 2021 under what the analysts said is “a 'current law’ framework. These projections are subject to substantial uncertainty for many reasons.”

The report’s authors note the pending U.S. Supreme Court decisions regarding the Affordable Care Act expected by the June 30 end of the court’s term. “The supply-side effects of the Affordable Care Act, such as changes in providers’ behavior in reaction to an influx of newly insured patients, also remain highly speculative and are not included in these estimates,” they said.

But even “without the impacts of the Affordable Care Act,” the NHE team projects steady gains in dental and aggregate health care spending through the decade. The dental share of total health expenditures is projected at 3.7 percent in 2011 and 2021 with or without the ACA expansions.

The NHE accounts project the first albeit minimal dental spending increase under the Affordable Care Act for 2011, from an estimated $107.6 billion not factoring in the ACA to $107.9 billion with the ACA. The differences increase throughout the decade, particularly in 2014 and beyond when Medicaid and other ACA expansions take effect and peak in 2021 when dental spending without the ACA is projected at $177.1 billion or $2.7 billion less than the “current law” projection of $179.8 billion.

The annual dental services growth rate throughout the decade is slightly higher when the projections include ACA impacts. Dental spending is projected to increase by 5.4 percent in 2015 over the previous year when the ACA is included and 4.4 percent without the ACA. The annual growth rate in dental spending accelerates after 2013 to as high as 6.6 percent in 2019 with the ACA and 6.4 percent without the ACA.

Major ACA coverage expansions take effect beginning in 2014. These expansions are expected to increase the number of persons with health insurance, the demand for health care and the share of total health spending sponsored by federal, state and local governments, the NHE team says in a Web First report published in the journal Health Affairs.

Projected health spending over the decade reflects the impacts of economic, legislative and demographic factors, such as the aging population, on U.S. health care costs. Rising government spending on health care, projected to reach nearly 50 percent of total national health spending by 2021, is expected to be driven by faster growth in Medicare enrollment, expanded Medicaid coverage and the introduction of premium and cost-sharing subsidies for health insurance exchange plans.

The health spending projections were based on the National Health Expenditures released in January 2012.