U.S. healthcare spending growth slowed 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

The total out-of-pocket health care spending in 2016 increased by 3.9%, a one percent increase from 2015's out-of-pocket rate of 2.8%.

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. Though it was a slow growth of spending, it still increased at a rate faster than the gross domestic product growth - increasing the share of economy devoted to health care from 17.7% to 17.9%. Spending for the program grew at 3.6% in 2016-slowing from 4.8% growth in 2015-while enrollment growth was stable.

The 1.3 percent increase in drug spending was in line with the average growth rate of 1.2 percent from 2010 to 2013. Authors cited the ramp up of the ACA for the faster growth beginning in 2014.

In analysis released by the Office of the Actuary at the Centers for Medicare and Medicaid Services, the U.S. was estimated to have increased its health care spending by 4.3% a year ago - a drop in spending growth compared to 2015 and 2014. The decline was driven by slower enrollment growth following expansion under Obamacare.

In all, spending on health care in the United States hit $3.3 trillion in 2016, working out to $10,348 per person. It also noted that private insurers, Medicare and Medicaid all saw spending slowed due to lower growth rates per enrollee. 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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Physician and clinical services spending slowed from a growth rate of 5.9% in 2015 to 5.4% in 2016, with total physician and clinical services expenditures reaching $664.9 billion, or 20% of overall healthcare spending.

"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. Increases in medical prices accounted for 1.4 percentage points, while growth in the residual use and intensity of healthcare goods and services accounted for the remaining 1.6 percentage points. Last year, 22 new medicines were approved, compared with 45 in 2015 and 41 in 2014.

Retail prescription drugs expenditures reached $328.6 billion and represented 10% of overall health spending.

Medicare and Medicaid accounted for a total of 37% of national health expenditures. Medicaid spending in 2014 grew 11.5%, and 9.5% in 2015. In 2015, spending for the sector accelerated 5.8%.

In all, payers spent $162.7 billion on care at nursing homes and continuing care retirement communities (CCRCs), an increase of 2.9% from 2015. But that it only grew at a rate of 4.3% - down from the 5.1% and 5.8% spending growth rates seen in 2014 and 2015, respectively. 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.

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