USA healthcare spending growth slowed in 2016

Thursday, 07 Dec, 2017

"This includes Medicaid, private health insurance, and Medicare, as well as retail prescription drugs, hospital care, and physician and clinical services".

Micah Hartman, a statistician in the Office of the Actuary at CMS, and lead author of the to-be published study on the analysis, noted recent fluctuations in cost and spending.

That ranged from slower growth in Medicaid spending after the surge in enrollment caused by the Affordable Care Act expansion, to a marked slowdown in prescription drug spending growth that had been pushed higher by the approval of a new, expensive treatment for hepatitis C in 2013. Private health insurance spending on physician and clinical services, which represented a 43% share of all physician and clinical services spending, increased 5.8% in 2016, a slight uptick from 5.5% growth in 2015.

And, healthcare spending growth easily outpaced the 2.9% rate of growth for the Gross Domestic Product in 2016. In that report, CMS actuaries projected national health spending to grow at an average rate of 5.6 percent per year from 2016 to 2025 and to grow 1.2 percentage points faster than GDP per year. Changes in the age and gender mix of the population accounted for 0.6 percentage point of the growth in per capita health spending. Out-of-pocket spending grew 3.9 percent to $352.5 billion in 2016, faster than the 2.8 percent growth in 2015. The decline was driven by slower enrollment growth following expansion under Obamacare. In 2015, spending for the sector accelerated 5.8%. 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 growth in clinical services spending was driven primarily by continued strong growth in spending for freestanding ambulatory surgical and emergency centers.

What's more, according to the CMS actuaries, the slower growth in health care spending in 2016 was more in line with the average annual rate of growth during the period 2008-15 and was higher than growth for the overall economy.

Medicaid spending on physician and clinical services saw a larger slowdown, increasing only 4.1% in 2016 after growing 9.9% in 2015 and 21.8% in 2014, due in part to slower enrollment growth.

"Not surprisingly, federal government spending grew more slowly in 2016, as the initial impacts of enrollment expansion were realized and Medicaid enrollment growth (particularly for the newly eligible) decelerated". In any case, national health spending is actually trillions of dollars lower than projected before the Affordable Care Act became law.

Spending on private health insurance rose 5.1 percent to $1.1 trillion, which was slower than the 6.9 percent growth in 2015. On a per capita basis, national health spending grew at 3.5%, reaching $10,348 previous year. Slower growth was due to a leveling in the number of people gaining health coverage a year ago, according to the researchers. That is down from 5.7% in 2015. Total expenditures in this category reached $664.9 billion, or 20% of overall healthcare spending. Physician and clinical servicesPhysician and clinical services spending slowed from a growth rate of 5.9% in 2015 to 5.4% in 2016. There were mixed reasons for the slower growth in hospital spending.

Medicaid spending growth slowed in 2016, increasing 3.9 percent to $565.5 billion. Its enrollees' hospital care spending remained stable from 2015.