Published: Fri, December 08, 2017
Health | By Jay Jacobs

USA health spending growth slows, but still rises to 17.9% of GDP

USA health spending growth slows, but still rises to 17.9% of GDP

Growth in USA health spending slowed considerably in 2016, rising by 4.3 percent, after two years of higher spending growth spurred by Obamacare and prescription drugs.

Private health insurance reached $1.1 trillion and increased 5.1% in 2016, slower than 6.9% growth in 2015. Medicaid spending hit $565.5 billion past year, making up 17% of all national health expenditures. 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. The report estimates that in 2016, healthcare spending grew at a rate of 4.3% to $3.3 trillion, or $10,348 per person. On a per enrollee basis, private health insurance spending increased 5.1% in 2016, about the same as 2015.

That higher growth in those years was due in part to the addition of 19 million Americans to the ranks of people insured by either private insurance or Medicaid as a result of the Affordable Care Act. "This includes Medicaid, private health insurance, and Medicare, as well as retail prescription drugs, hospital care, and physician and clinical services".

CMS blamed the lethargic SNF spending growth on a slowdown in both public and private health insurance outlays: Medicare spending on skilled nursing and CCRC care rose 4.0% in 2015 and just 1.2% in 2016, while private expenditures rose 5.9% past year - as compare to a sizable 14.3% in 2015. Medicaid spending also decelerated in growth compared to previous years, increasing 3.9% to $565.5 billion. But that it only grew at a rate of 4.3% - down from the 5.1% and 5.8% spending growth rates seen in 2014 and 2015, respectively.

Medicaid, which provides health coverage to primarily poor people, is jointly run by the federal government and individual states. Medicare spending rose 3.6% to $672.1 billion, down from 4.8% growth in 2015, accounting for 20% of total healthcare expenditures.

Spending on retail prescription drugs grew by only 1.3 percent, to $328.6 billion, in 2016. The pace of home health spending slowed compared to recent years, though total spending in home health ticked up. Per-enrollee spending also increased at a slower rate than 2015 - 0.8% compared with 2.1%. Slower growth was due in part to slower enrollment growth and was partly offset by faster growth in hospital prices, which accelerated slightly from 0.9% in 2015 to 1.2% previous year.

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. CMS attributed the previous large increases to the introduction of new drugs and higher prices for existing drugs, particularly those used to help treat hepatitis C.

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