USA health-care spending hit $3.3 trillion in 2016

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Physician and clinical services spending rose by 5.4 percent, slowing from a growth rate of 5.9 percent in 2015. Furthermore, spending for retail prescription drugs slowed, partly as a result of lower spending for drugs used to treat hepatitis C, while slower use and intensity of services drove the slowdown in hospital care and physician and clinical services. "This includes Medicaid, private health insurance, and Medicare, as well as retail prescription drugs, hospital care, and physician and clinical services".

Spending growth also fell among the three major payers: private health insurance, Medicare and Medicaid. There was also an uptick in employer-sponsored coverage due to an improving economy. The deceleration was largely driven by slower enrollment growth in 2016 after two years of faster enrollment growth due to ACA coverage expansion. These losses were offset by faster growth in hospital prices, which accelerated slightly from 0.9 % in 2015 to 1.2 % in 2016.

The findings, published Wednesday by Health Affairs, are considered the authoritative breakdown of American health care spending and are prepared each year by the Centers for Medicare and Medicaid Services. That's slower than the 3.7% growth between 2014 and 2015, CMS's Office of the Actuary noted in a Wednesday release.

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

Total physician and clinical services expenditures reaching $664.9 billion, or 20 percent of overall healthcare spending in 2016.


Private health insurance spending grew by 5.1 percent to $1.1 trillion past year, while Medicare spending grew by 3.6 percent to $672.1 billion. Dating back to 1960, the NHEA measures annual US expenditures for health care goods and services, public health activities, government administration, the net cost of health insurance, and investment related to health care. This means slower growth in fee-for-service Medicare spending as MA is value-based. That's a major drop from the 9.5% and 11.5% increases seen in the prior two years.

The slowdown in spending growth - a 4.3 percent increase in 2016, following a 5.8 percent growth the previous year - stemmed from changes in a broad array of health care sectors. Out-of-pocket hospital spending growth jumped in 2016 after 2 years of declines because of enrollment in consumer-directed health plans, which tend to have higher co-payments and deductibles than other forms of insurance.

Medicaid accounts for 17 percent of total national health expenditures.

Despite the slower growth in 2016, healthcare spending still increased faster than the rate of growth for gross domestic product. 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 study authors wrote.

Changes in the age and gender mix of the population accounted for 0.6 percent of the growth. Spending for the program grew at 3.6% in 2016-slowing from 4.8% growth in 2015-while enrollment growth was stable.


The authors said this year's trend of slower growth could be a sign that things were returning to normal.

During 2014 and 2015, the health spending share of the economy increased 0.5 percentage points from 17.2 percent in 2013 to 17.7 percent in 2015.

"Not surprisingly, federal government spending grew more slowly in 2016, as the initial impacts of enrollment expansion were realized and Medicaid enrollment growth (particularly for the newly eligible) decelerated". For private health insurance and Medicaid, the slower growth was influenced by decelerated enrollment growth.

Medicaid goods and services spending decelerated in 2016, with the exception of nursing care facilities and continuing care retirement communities.

On a per capita basis, national health spending grew at 3.5 percent, reaching $10,348 in 2016. There was also a sharp decrease in the growth of prescription drug expenditures, as hepatitis C treatment costs have declined and fewer patients are receiving them.


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