March 24, 2018

CMS reports slowed health spending growth

08 December 2017, 08:32 | Opal Carroll

US Health Care Spending Reached $3.3 Trillion in 2016

US health-care spending hit $3.3 trillion in 2016

Previously, the health spending share of the economy increased 0.5 percentage point from 17.2% in 2013 to 17.7% in 2015. Major payersPrivate health insurance rose 5.1% to $1.1 trillion, slower than 6.9% growth in 2015. Though it was a slow growth of spending, it still increased at a rate faster than the gross domestic product growth - increasing the share of economy devoted to health care from 17.7% to 17.9%.

Medicare spending overall grew 3.6% to $672.1 billion in 2016, lower than the growth reported in the previous two years. Growth in non-price factors such as the use and intensity of services increased 3.8% and accounted for most of the increase in spending in 2016, though at a slower rate than the 4.5% increase in 2015.

In analysis released by the Office of the Actuary at the Centers for Medicare and Medicaid Services, the United States was estimated to have increased its health care spending by 4.3% past year - a drop in spending growth compared to 2015 and 2014.

The slower growth in 2016 may indicate a return to a more normal trend with future factors based on economic conditions and shifting demographics, the authors write. Medicaid spending also decelerated in growth compared to previous years, increasing 3.9% to $565.5 billion.

Among goods and services, retail prescription drugs saw the lowest growth rate, with physician and clinical services, which make up 20% of overall health spend, up 5.4% and hospital spending up 4.7%, making it 32% of all healthcare spending. Slower growth in total healthcare spending in 2016 was primarily due to a falloff in retail prescription drug spending (a result of fewer new drugs and a decline in spending on hepatitis C medications, among other reasons), hospital care, and physician and clinical services. It also noted that private insurers, Medicare and Medicaid all saw spending slowed due to lower growth rates per enrollee.

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The decline was driven by slower enrollment growth in health insurance programs, which in turn lead to decreased use of medical services, the report found. Spending growth per Medicare enrollee increased at a slower rate in 2016 (0.8%) than in 2015 (2.1%).

Medicare and Medicaid accounted for a total of 37% of national health expenditures. Its enrollees' hospital care spending remained stable from 2015.

Every US resident spent, on average, $10,348 past year on health care. The lone thriving growth in its wealth of goods and services was expenses for nursing care facilities and continuing care retirement communities.

Authors of the CMS report said spending growth slowed a year ago for all three major categories of medical goods and services - hospitals, physician/clinical services and retail prescription drugs - for the first time since 2010. Medicaid spending increased 3.9% in 2016, much slower than the rates in 2015 and 2014 (9.5% and 11.5%, respectively), both of which were due to the initial impacts of ACA's expansion of Medicaid eligibility. Despite large fluctuations in growth rates over the past several years, the 10% share of national health spending is similar to the share in 2009.

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