Coverage expansion, utilization increases lead to health spending growth
Wednesday, January 04, 2017
A new analysis from the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS) estimates that 2015 healthcare spending in the United States grew at a rate of 5.8 percent and reached $3.2 trillion. In comparison, 2014 spending increased 5.3 percent, following five consecutive years of historically low growth from 2009 to 2013.
The increased growth in both years is attributed to Affordable Care Act (ACA) provisions that expanded coverage for individuals through Marketplace plans and the Medicaid program. The result was in an increase in the percentage of the U.S. population with health insurance — from 86 percent in 2013 to 90.9 percent in 2015.
Health spending's share of the nation's gross domestic product (GDP) rose to 17.8 percent in 2015 from 17.4 percent in 2014. On a per capita basis, spending reached $9,990 in 2015, and the 5 percent growth came from changes in the age and sex mix of the population (0.6 percent), increases in medical prices and residual use (1.2 percent) and intensity of healthcare goods and services (3.2 percent).
Faster growth in total healthcare spending was primarily due to accelerated growth in spending for private health insurance (7.2 percent), hospital care (5.6 percent) and physician and clinical services (6.3 percent). While Medicaid spending and retail prescription drug spending grew at a slower rate than in 2014, continued strong growth in both contributed to overall healthcare spending growth in 2015.
Unlike previous growth during times of recession, this one is due to 9.7 million individuals gaining private health insurance coverage and 10.3 million more people enrolling in Medicaid coverage. An additional contributing factor is the rapid growth in retail prescription drug spending.
Major payers' spending growth
Private health insurance spending increased 7.2 percent, reaching $1.1 trillion; one-third of total healthcare spending in 2015.
- A notable increase of 1.4 percent in enrollment of individuals in employer-sponsored health plans as the labor market continued to improve.
- An increase of 7.9 percent in private health insurance benefit payments
- Accelerated growth in hospital and physician (9.1 percent) and clinical services (6.5 percent) spending reflecting: Increased enrollment
- Increased per enrollee spending
- Some sicker newly insured individuals who used more services and had higher medical costs than those previously insured
Medicare spending grew at 4.5 percent, a bit slower than in 2014, and reached $646.2 billion, accounting for 20 percent of total health expenditures. The slower growth rate is attributed to:
- Slower (2.7 percent) Medicare enrollment for a total of 54.3 million beneficiaries in 2015
- Slower hospital and prescription drug spending growth with a corresponding shift to nursing home and home healthcare spending.
Medicaid expenditures reached $545.1 billion in 2015, accounting for 17.0 percent of total health expenditures. Medicaid's growth rate slowed to 9.7 percent in 2015 from 11.6 percent in 2014, as a result of slowed growth in enrollment.
- On a per enrollee basis, spending grew faster in 2015, increasing 3.8 percent compared to 0.4 percent in 2014 and reflecting states' adoption of higher reimbursement rates.
- Growth in Medicaid spending for physician and clinical services and prescription drugs slowed, while spending for hospital care and other health, residential and personal care services increased at a faster rate from 2014.
Major goods and services' spending growth
Physician and clinical service spending increased from a growth rate of 4.8 percent in 2014 to 6.3 percent in 2015, with total expenditures reaching $634.9 billion — or 20 percent of overall health spending.
- This is the first growth rate above 6 percent in a decade; driven by faster growth in nonprice factors, such as residual use and intensity of services.
- Spending for physician services increased 6.1 percent
- Clinical services expenditures increased 7.2 percent; driven by continued fast growth in outpatient care centers, such as community health centers, kidney dialysis centers and outpatient mental health and substance abuse centers.
Hospital spending reached $1 trillion and represented 32 percent of overall health spending in 2015. The faster growth in hospital care expenditures (5.6 percent) reflected continued strong growth in nonprice factors, such as the use and intensity of services from private health insurance and Medicaid. The slower growth in Medicare hospital spending somewhat offsetting their impact.
- The increase in inpatient days (1.8 percent) and hospital discharges (1.2 percent) is the first time there have been two consecutive years of growth for both measures since the Census Bureau began tracking these utilization categories in 2005.
Retail prescription drug spending reached $324.6 billion and represented 10 percent of overall health spending. Although the 2015 spending growth of 9 percent was slower than the rate of 12.4 percent in 2014, growth in prescription drug spending was faster than that of any other service in 2015. The recent rapid growth is attributed to increased spending on new medicines, price growth for existing brand-name drugs, increased spending on generics, and a decrease in the number of expensive blockbuster drugs with expiring patents.
While 2014-15 is unique given the significant changes in health coverage that have taken place, health spending is projected to increase as a share of the overall economy in the decade ahead. It will be influenced by the aging of the population, changing economic conditions and faster medical price growth.
The full analysis will be available in the January 2017 issue of Health Affairs.
- Medical & Allied Healthcare
- Healthcare Administration
- Mental Healthcare
- Oral & Dental Healthcare
- Best exercises for gluteus medius strengthening
- Pectoralis minor: Far from a minor problem
- The importance of hip internal rotation
- 17 of the most specific, bizarre ICD-10 codes
- The top 5 exercises you should be doing
- Children of the badge: The impact of stress on law enforcement children
- The addictive eye drops that kill
- 8 signs you could be depressed and not even know it
- Study: Controlling the risk of osteoarthritis with proteins
- AI on the rise in healthcare
- What can woodpeckers teach us about brain injuries?
- Law enforcement supports variety of gun control reform efforts
- Trendjacking: The good, the bad and the ugly
See your work in future editions
Your content, Your Expertise,
Your Industry Needs YOUR Expert Voice & We've got the platform you needFind Out How