U.S. healthcare spending growth slowed in 2016

Gov’t report US health care tab hit $3.3T in 2016

National Health Spending Growth Slows in 2016 in Wake of Coverage Expansions, Decline in Drug Spending

While the rate of healthcare spending decrease past year, the overall sending for health services continued to increase.

Authors of the CMS report said spending growth slowed past 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.

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.

As the spending rate for USA health services slowed down across most forms of healthcare industries, there was one section that increased: out-of-pocket health charges.

Healthcare spending in the United States grew by 4.3% to $3.3 trillion, or $10,348 per person, and represented almost 18% of the national economy in 2016, federal actuaries report.

Previously, the health spending share of the economy increased 0.5 percentage point from 17.2% in 2013 to 17.7% in 2015. "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". CMS attributes the slowdown to a wider slowdown in spending growth for retail prescription drugs, hospital care and physician and clinical services.

Health care spending rose 4.3 percent past year to $3.3 trillion after a 5.8 percent increase in 2015. Medicaid spending hit $565.5 billion previous year, making up 17% of all national health expenditures.

Medicare, the federal health program for the elderly, and Medicaid, the government's program for the poor, each reduced spending and fewer people enrolled in private health insurance following a big coverage expansion under Obamacare.

Medicare spending overall grew 3.6% to $672.1 billion in 2016, lower than the growth reported in the previous two years.

The 8.2% spending growth for clinical services almost doubled the 4.6% growth in spending for physician services for the twelfth consecutive year.

But out-of-pocket spending, or spending directly by individuals instead of by their insurance plans or programs, grew at a faster rate than in recent years. Physician and clinical services and prescription drug spending growth slowed, while Medicare hospital care spending remained relatively stable in 2015 and 2016. Slower growth was due in part to slower enrollment growth and was partly offset by faster growth in hospital prices, which accelerated slightly from 0.9% in 2015 to 1.2% previous year. The slowing was driven by fewer new drugs being introduced and less spending on pricey treatments for hepatitis C.

Retail prescription drugs expenditures reached $328.6 billion and represented 10% of overall health spending. Per-enrollee spending also increased at a slower rate than 2015 - 0.8% compared with 2.1%. The share of spending made up of retail prescription drug is similar to what it was in 2009, CMS said.

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