Growth in U.S. Healthcare Spending Slowed in 2016: CMS

In 2016, overall growth in national spending on healthcare slowed in 2016, increasing 4.3 percent following 5.8 percent growth in 2015, according to a report by actuaries with the Centers for Medicare & Medicaid Services (CMS).

Following Affordable Care Act (ACA) coverage expansion and significant retail prescription drug spending growth in 2014 and 2015, health care spending growth decelerated in 2016. The report concludes that the 2016 expenditure slowdown was broadly based as growth for all major payers (private health insurance, Medicare, and Medicaid) and goods and service categories (hospitals, physician and clinical services, and retail prescription drugs) slowed in 2016.

During 2014 and 2015, the health spending share of the economy increased 0.5 percentage point from 17.2 percent in 2013 to 17.7 percent in 2015. The increases in the health spending share of the economy in 2014 and 2015 were largely due to coverage expansion that contributed to 8.7 million individuals gaining private health insurance coverage and 10.2 million gaining Medicaid coverage over the period and to significant growth in retail prescription drug spending. Health care spending grew 1.5 percentage points faster than the overall economy in 2016, resulting in a 0.2 percentage-point increase in the health spending share of the economy – from 17.7 percent in 2015 to 17.9 percent in 2016.

Additional information from the report:

In 2016, the federal government and households accounted for the largest shares of spending (28 percent each) followed by private businesses (20 percent), state and local governments (17 percent), and other private revenue (7 percent). After two consecutive years of rapid growth (10.9 percent in 2014 and 8.9 percent in 2015), federal government spending for health care slowed, increasing 3.9 percent in 2016. The primary reason for the deceleration in federal spending growth in 2016 was federal Medicaid spending, which grew more slowly in 2016 as a result of less Medicaid enrollment growth.

THE NATION’S HEALTH DOLLAR ($3.3 TRILLION), CALENDAR YEAR 2016: WHERE IT CAME FROM AND WHERE IT WENT

Source: CMS Report