Growth in health spending slows

US Health Care Spending Reached $3.3 Trillion in 2016

"Because the unique factors that influenced the health sector over the past decade did not have as great an effect in 2016, this may be an initial indication that this year marks a return to the more typical relationship between annual rates of growth in healthcare spending and growth in nominal GDP", the paper states.

The overall slowdown was highlighted by the National Health Expenditure report issued by the federal Centers for Medicare and Medicaid Services' Office of the Actuary. Total expenditures in this category reached $664.9 billion, or 20% of overall healthcare spending. "This includes Medicaid, private health insurance, and Medicare, as well as retail prescription drugs, hospital care, and physician and clinical services". The 2016 analysis from the Office of the Actuary at CMS was published online Wednesday in Health Affairs and will appear in its January 2018 edition.

Among payer entities, private health insurance still saw the greatest increase in spending growth, even at a rate greater than overall health care (5.1%). "In addition, in 2014 and 2015 we saw strong and rapid spending growth in retail prescription drugs".

Medicaid spending growth grew 3.9% to $565.5 billion in 2016. Changes in the age and gender mix of the population accounted for a 0.6 percentage point of the growth in per capita health spending.

The slower growth in hospital spending in 2016 reflected a slower growth of 2.3% in the use and intensity of services, lower than the increase of 3.4% in 2015.

The 8.2% spending growth for clinical services almost doubled the 4.6% growth in spending for physician services for the twelfth consecutive year. Spending growth for clinical services (8.2%) outpaced growth in spending for physician services (4.6%) for the twelfth consecutive year. CMS attributed much of the increase to a shift toward enrollment in health insurance plans that have high deductible payments. It also noted that private insurers, Medicare and Medicaid all saw spending slowed due to lower growth rates per enrollee. Medicare spending slowed because of lower per enrollee growth rates. Major payersPrivate health insurance rose 5.1% to $1.1 trillion, slower than 6.9% growth in 2015.

Together, Medicare and Medicaid made up 77% of home health spending in 2016.

"Over the last decade, the U.S. 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", Hartman said. Medicaid and private health insurance spending growth slowed, mainly as the result of ACA enrollments in 2014 and 2015.

Medicare spending hit $672.1 billion, accounting for 20% of total healthcare expenditures.

Private health insurance spending climbed 5.1 percent to $1.1 trillion a year ago, Medicare spending increased 3.6 percent to $672.1 billion, and Medicaid spending rose 3.9 percent to $565.5 billion.

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.

The slowed growth in comparison to recent years is linked to decelerated spending for retail prescription drugs, hospital care, clinical services.

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