US Health Care Spending Decreases in 2016

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

US Healthcare Spending Hit $3.3T in 2016

Spending on private health insurance rose 5.1 percent to $1.1 trillion, which was slower than the 6.9 percent growth in 2015. Medicaid spend grew 3.9%, compared with 9.5% in 2015 and 11.5% in 2014.

The slowdown in health spending growth was seen broadly across all major forms of private and public insurance, and in medical services, prescription drugs and other goods, according to an official analysis released Wednesday. Physician and clinical services and prescription drug spending growth slowed, while Medicare hospital care spending remained relatively stable in 2015 and 2016. CMS said that a downturn in enrollment growth, as well as lower retail prescription drug spending. "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".

On Wednesday, a federal study conducted by the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS) showed that while the overall spending for health services increased in 2016 ($3.3 trillion), the pace at which spending for healthcare slowed down drastically compared to the previous two years.

That higher growth in those years was due in part to the addition of 19 million Americans to the ranks of people insured by either private insurance or Medicaid as a result of the Affordable Care Act. The deceleration was largely driven by slower enrollment growth in 2016 after two years of faster enrollment growth due to ACA coverage expansion.

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The fraction of uninsured Americans fell 2.8%, from 29.5 million in 2015 to 28.6 million in 2016, a stark slowdown from 2014 and 2015 where the number fell by more than 17% both years. Republicans in Congress have tried unsuccessfully to cap federal Medicaid spending to states to help control growth in the program, an effort opposed by Democrats and advocates for the poor.

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. Medicare spending had increased by 4.8 percent in 2015 and 4.9 percent in 2014.

The 8.2% spending growth for clinical services almost doubled the 4.6% growth in spending for physician services for the twelfth consecutive year. Medicaid expenditures rose 3.9% to $565.5 billion in 2016, accounting for 17% of total national healthcare spending. Medicaid goods and services-with the exception of nursing care facilities and continuing care retirement communities-experienced decelerating growth in 2016.

Spending on retail prescription drugs grew by only 1.3 percent, to $328.6 billion, in 2016. 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. The report noted that share was similar to 2009's.

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