CMS: US healthcare spending slows in nearly every corner of the market
Thursday, December 13, 2018
Healthcare spending slowed in 2017 for the second consecutive year in the United States, with a limited growth rate of 3.9 percent — almost one percentage point lower than in 2016 — according to new statistics released by the federal government in December.
Healthcare’s share of the nation’s gross domestic product (GDP) is 17.9 percent with total spending emerging at $3.5 trillion — the equivalent of $10,739 per person — but growing slower than the overall GDP.
Why the slowing growth? According to the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS) and published in Health Affairs, the slower growth was related to the use and intensity of services in hospitals, clinics and physician offices, making up 63 percent of healthcare spending.
Hospital spending, a third of all healthcare expenditures, grew to 4.4 percent last year for a total of $1.1 trillion compared to what comparatively seems like a massive 5.6 percent job from 2016. Outpatient services decelerated. Inpatient days increased at about the same rate while physician and clinical services spending growth dropped to 4.2 percent from 5.6 percent in 2016, also a major drop.
Healthcare spending growth was up the two previous years, 2014 and 2015, because of “new coverage through the Affordable Care Act marketplaces and Medicaid expansion.”
“Though the use and intensity of medical services has declined, medical prices have grown, accounting for half of the per capita health spending growth rate. Overall, the federal government's healthcare spending grew 3.2 percent in 2017, down from 4.9 percent the previous year,” FierceHealthcare points out.
On the retail side, prescription drug spending increased much less than 1 percent (just 0.4 percent) to $333.4 billion. This is down from 2.3 percent growth in 2016. This is in part because of a decrease in the number of prescriptions dispensed.
The crackdown on opioid prescriptions played a significant role, said Anne Martin, lead author of the study and an economist in the National Health Statistics Group at the CMS Office of the Actuary.
“The number of prescriptions for pain had a large impact on the trend and a lot of that did have to do with opioid epidemic and tightening of prescriptions being dispensed,” Martin said on a call with reporters.
Spending on durable medical equipment and residential and personal care were the only services to increase in 2017. Durable medical equipment spending grew 6.8 percent, up from 4.8 percent in 2016.
On the health plan side, private health plans growth dropped significantly, from 6.2 percent in 2016 to 4.2 percent in 2017. Medicare remained flat, while Medicaid rates dropped from 4.2 percent to 2.9 percent. Households and the federal government still account for the majority of healthcare spending at 56 percent. However, household spending on healthcare slowed a full percentage point to 3.8 percent.
Overall healthcare spending growth began slowing in 2016 when it hit 4.8 percent.
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