Skip to main content

The Journal Gazette

  • FILE

Thursday, December 07, 2017 1:00 am

Health care spending slows down

Hospitals, Rx drugs, physician services all see declines: Report

BRIAN FRANCISCO | The Journal Gazette

The pace of health care spending in America slowed in 2016, the Centers for Medicare and Medicaid Services reported Wednesday.

Health care spending rose 4.3 percent last year to $3.3 trillion after a 5.8 percent increase 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 nearly 19 million people. The ACA requires most Americans to carry medical insurance – a mandate that would be repealed by the Senate tax overhaul plan.

Authors of the CMS report said spending growth slowed last 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. And they told reporters they could not recall another time before last year that spending growth had slowed for all three major payers – private health insurance, Medicare and Medicaid – and for goods and services, too.

Private health insurance spending climbed 5.1 percent to $1.1 trillion last year, Medicare spending increased 3.6 percent to $672.1 billion, and Medicaid spending rose 3.9 percent to $565.5 billion. All three increases were well below growth rates of the previous two years; for example, Medicaid spending jumped 11.5 percent in 2014 and 9.5 percent in 2015.

Still, health care spending grew slightly faster than the overall economy in 2016, increasing health care's share of the economy from 17.7 percent in 2015 to 17.9 percent last year.

Other findings of the study conducted by CMS' Office of the Actuary included:

• Consumers' out-of-pocket spending, such as co-payments and deductibles, grew 3.9 percent to $352.5 billion in 2016, the highest such rate since 2007. CMS attributed much of the increase to a shift toward enrollment in health insurance plans that have high deductible payments.

• Retail prescription drug spending increased 1.3 percent to $328.6 billion in 2016, compared with increases of 8.9 percent in 2015 and 12.4 percent in 2014. 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.

• The rate of increase for federal government spending on health care slowed from 10.9 percent in 2014 and 8.9 percent in 2015 to 3.9 percent last year as Medicaid enrollment growth decelerated.