CMS reports slowed health spending growth
The Centers for Medicare and Medicaid Services have released new data from 2016 showing that upward trajectory of U.S. healthcare spending has slowed. The agency, in a report published in the January 2018 issue of Health Affairs that 2016 saw spending increase to 17.9% of U.S. gross domestic product. 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.
The rate of spending growth for 2016 is more in-line with the average of 4.2% growth seen between 2008 and 2015. CMS attributes the slowdown to a wider slowdown in spending growth for retail prescription drugs, 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. On a per-capita basis, spending grew at 3.5%, reaching $10,348 last year.
Private insurer spend increased 5.1% to $1.1 trillion in 2016 (roughly 33% of all health expenditures), which is a slowdown from the 6.9% growth seen in 2015. CMS said that a downturn in enrollment growth, as well as lower retail prescription drug spending. Medicare spending grew 3.6% to $671.2 billion in 2016, compared with 4.8% in 2015, while reporting stable enrollment growth. Per-enrollee spending also increased at a slower rate than 2015 — 0.8% compared with 2.1%. Medicaid spending hit $565.5 billion last year, making up 17% of all national health expenditures. Medicaid spend grew 3.9%, compared with 9.5% in 2015 and 11.5% in 2014. CMS attributed the spikes in past years to the initial impact of the Affordable Care Act’s expanded Medicaid eligibility and an increase in enrollment.
Retail prescription spending increased 1.3% in 2016, growing to $328.6 billion — roughly 10% of overall health spending. The growth is markedly lower than the 12.4% seen in 2014 and 8.9% in 2015, which CMS said was due to an influx of hepatitis C treatments on the market. The share of spending made up of retail prescription drug is similar to what it was in 2009, CMS said.
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.
“Over the last decade, the US 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 the Health Affairs article. “In 2016, the slowdown in health care spending followed significant insurance coverage expansions under the ACA and very strong growth in retail prescription drug spending in 2014 and 2015.”
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