National Health Spending Growth Slows in 2016 in Wake of Coverage Expansions, Decline in Drug Spending
08 December, 2017, 02:08
The notable slowdown in private health insurancespending was mainly driven by slower enrollment growth, slower growth in spending for retail prescription drugs, and a continued shift to high-deductible plans.
The slowdown in health spending growth was seen broadly across all major forms of private and public insurance, and in medical services, prescription drugs and other goods, according to an official analysis released Wednesday.
While the rate of healthcare spending decrease past year, the overall sending for health services continued to increase.
On a per capita basis, national health spending grew at 3.5%, reaching $10,348 in 2016.
In an online report and a media conference call, CMS attributed faster spending growth in 2014 and 2015 to the implementation of the federal Affordable Care Act and its related Medicaid expansion, which together extended health insurance to almost 19 million people. "This includes Medicaid, private health insurance, and Medicare, as well as retail prescription drugs, hospital care, and physician and clinical services".
Private health insurance spending climbed 5.1 percent to $1.1 trillion past year, Medicare spending increased 3.6 percent to $672.1 billion, and Medicaid spending rose 3.9 percent to $565.5 billion.
Medicaid spending growth grew 3.9% to $565.5 billion in 2016.
In 2014 and 2015, spending increased 5.1% and 5.8%, respectively, as the Affordable Care Act expanded health insurance coverage through Marketplace plans and Medicaid.
Medicaid, which provides health coverage to primarily poor people, is jointly run by the federal government and individual states.
Medicare spending overall grew 3.6% to $672.1 billion in 2016, lower than the growth reported in the previous two years. Last year, on a per enrollee basis, Medicaid spending increased 0.9%, down from 4.5% in 2015, which reflects increased efforts by states to control costs, a decline in supplemental payments to hospitals, and a decrease in per enrollee costs for newly eligible adults.
"Over the last decade, the USA has experienced unique events that have affected the health care sector, including the most severe economic recession since the Great Depression, major changes to the health care system because of the ACA and historic lows in medical price inflation", said Micah Hartman, a statistician in the Office of the Actuary at CMS and lead author of a Health Affairs article on the results.
Retail prescription drugs expenditures reached $328.6 billion and represented 10% of overall health spending.
Despite slower growth in health spending overall, consumers still faced the fastest rate of growth in out-of-pocket spending since 2007, with an increase of 3.9%. The deceleration was largely driven by slower enrollment growth in 2016 after two years of faster enrollment growth due to ACA coverage expansion.
Authors of the CMS report said spending growth slowed past year for all three major categories of medical goods and services - hospitals, physician/clinical services and retail prescription drugs - for the first time since 2010.