CMS Reports Health Care Spending Slowed in 2016

The Centers for Medicare and Medicaid Services (CMS) Office of the Actuary recently released its data on the 2016 National Health Expenditures.  The report shows that overall national health spending increased 4.3 percent in 2016, lower than the 5.8 percent growth in 2015.  This spending “slowdown” was broadly-based, covering all major payers and goods and service categories, including hospitals, physician and clinical services and retail prescription drugs. Key findings include:

  • Physicians – spending in 2016 for physician and clinical services increased 5.4 percent to $664.9 billion.  The CMS Actuary noted that growth in this category “decelerated slightly in 2016 from the (5.9 percent in 2015),” and “outpaced the growth in all other goods and services categories,” with the driving factor “growth in the use and intensity of physician and clinical services.”
  • Private Health Insurance Spending – slower enrollment growth in 2016 led to lower private health insurance spending growth of 5.1 percent compared to 6.9 percent growth in 2015.
  • Medicare – spending grew 3.6 percent for Medicare in 2016, slower than the 4.8 percent spending growth in 2015.  Total Medicare spending in 2016 was $672.1 billion.
  • Medicaid – spending grew 3.9 percent for Medicaid in 2016, slower than the 9.5 percent growth in spending in 2015.  Medicaid spending was $565.5 billion in 2016.  The CMS Actuary indicates higher Medicaid spending in 2015 and 2014 “was due in part to the initial impacts of the [Affordable Care Act’s] expansion of Medicaid enrollment during that period.”
  • Out-of-pocket consumer spending – this spending category grew 3.9 percent in 2016, which was faster than the 2.8 percent growth in 2015.  The Actuary notes that “2016 was the fastest rate of growth since 2007 and was higher than the average annual growth of 2.0 percent during 2008-15. The faster growth in 2016 was due in part to a continued shift towards enrollment in high-deductible health plans, which was somewhat offset by a continued decrease in the number of uninsured in 2016.”
  • Retail Prescription Drug Spending – spending in this category increased 1.3 percent in 2016, following “two years of significant growth in 2014 and 2015, 12.4 percent and 8.9 percent, respectively.”  Total spending in 2016 for retail prescription drugs was $328.6 billion. The Actuary attributed significant growth in this category in 2014 and 2015 largely to “increased spending on new medicines and price growth for existing brand-name drugs, particularly for drugs used to treat hepatitis C,” adding that slower growth in 2016 occurred primarily because of “fewer new drug approvals, slower growth in brand-name drug spending as spending for hepatitis C drugs declined, and a decline in spending for generic drugs as price growth slowed.”
  • Hospitals – 2016 spending for hospital care increased 4.7 percent to $1.1 trillion, slower than 2015 growth of 5.7 percent, with slower growth “driven by the slower growth in the use and intensity of services.”

Additional information can be found on the CMS website.



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