Health care spending slows down

Dr. Martha Perez examines Maria Lebron in a room at the Community Health of South Florida Doris Ison Health Center in Miami Florida

Dr. Martha Perez examines Maria Lebron in a room at the Community Health of South Florida Doris Ison Health Center in Miami Florida

In all, spending on health care in the United States hit $3.3 trillion in 2016, working out to $10,348 per person.

Authors of the CMS report said spending growth slowed previous 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. On a per enrollee basis, private health insurance spending increased 5.1% in 2016, about the same as 2015.

The report noted that US health spending rose by 5.1 percent in 2014, and then by 5.8 percent in 2015. Retail prescription drugs Retail prescription drug spending increased just 1.3% a year ago, following much stronger growth rates in 2014 (12.4%) and 2015 (8.9%).

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% previous year - as compare to a sizable 14.3% in 2015.

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.

According to the CMS, the main reason for the slow down was the decreasing demand for physician services, prescription drugs, and hospital care by the American public.

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. Private health insurance continued to be the largest payer for health care goods and services in the U.S. in 2016-accounting for just over one-third of total healthcare spending.

And, healthcare spending growth easily outpaced the 2.9% rate of growth for the Gross Domestic Product in 2016. Medicare spending had increased by 4.8 percent in 2015 and 4.9 percent in 2014.

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.

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 on private health insurance rose 5.1 percent to $1.1 trillion, which was slower than the 6.9 percent growth in 2015. The slowing was driven by fewer new drugs being introduced and less spending on pricey treatments for hepatitis C. On a per capita basis, national health spending grew at 3.5%, reaching $10,348 past year. During the years of the initial impacts of the ACA expansion, Medicaid spending rose 9.5% last year and 11.5% in 2014 as individuals gained coverage.

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%.

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