Home Health Care Healthcare spending slows, but still reaches $3.5 trillion

Healthcare spending slows, but still reaches $3.5 trillion

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National healthcare expenditures has reached a new $3.5 trillion milestone for 2017, equivalent to more than $10,000 a person and nearly 19 percent of the country’s total GDP, according to data released by CMS and published in Health Affairs.

The 3.9 percent jump in spending levels from the year before actually represents a drop from the 4.8 percent increase seen in 2016 and the 5.5 percent hikes seen in 2015 and 2014.

The slower growth is due in part due to a slowdown in health plan enrollment and healthcare spending growth after increases see in the wake of the passage of the Affordable Care Act.

However, CMS mainly attributes the decline to “slower growth in use and intensity” of healthcare goods and services including hospital care, physician and clinical services and retail prescription drugs.

Ironically enough medical prices themselves grew faster than in recent prior years, but decreased utilization of clinical care and costly specialty medications outweighed that increase.

The 3.9 percent figure is lower than the initial 4.6 percent increase CMS projected earlier this year. Officials said the revised estimate was due to slowdowns in growth for private insurance, Medicare and retail drugs.

Retail prescription drug spending growth slowed to only 0.4 percent, which CMS attributes to slow growth in the number of prescriptions dispensed, a continuing shift to lower cost generics and declines in generic drug prices.

“A lot of that did have to do with the opioid epidemic and greater tightening of those types of prescriptions being dispensed,” CMS economist Anne Martin said in a call with reporters.

One potential factor that has led to that lower usage is the rise of high-deductible health plans, which push the financial burden of healthcare costs onto patients. Many studies have linked high-deductible health plans to a reduction in both preventative care and clinical visits.

A CDC report found that more than 40 percent of Americans were on high-deductible plans in 2017, compared to only 25 percent in 2010.

In fact, the top two groups pay the highest proportion of healthcare costs are the federal government and households each of whom are pay 28 percent of the share of healthcare costs. They are followed by private businesses and local and state governments which pay 20 percent and 17 percent, respectively.

Federal government spending growth has slowed since 2014 due to initial large increases because of the ACA Medicaid expansion creating higher benchmark spending levels.

Private health insurance spending increased 4.2 percent from 2016 to $1.2 trillion, making up 34 percent of total healthcare spending.

Medicare, which accounts for 20 percent of total healthcare spending, grew 4.2 percent to $705.9 billion. Growth was especially high in spending for Medicare private health plans, which can attributed to the rise of Medicare Advantage as a popular option for beneficiaries.

Photo: JamesBrey, Getty Images

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