USA health-care spending hit $3.3 trillion in 2016

Gov’t report US health care tab hit $3.3T in 2016

Growth in non-price factors such as the use and intensity of services increased 3.8% and accounted for most of the increase in spending in 2016, though at a slower rate than the 4.5% increase in 2015.

Physician and clinical services spending slowed from a growth rate of 5.9% in 2015 to 5.4% in 2016, with total physician and clinical services expenditures reaching $664.9 billion, or 20% of overall healthcare spending.

Spending on private health insurance rose 5.1 percent to $1.1 trillion, which was slower than the 6.9 percent growth in 2015.

Despite the slower growth in 2016, health care spending still increased faster than the rate of growth for GDP. In 2014 and 2015, spending increased 5.1 percent and 5.8 percent, respectively, as the ACA provided subsidies to help people get private coverage and most states expanded Medicaid.

The slow growth during those years is mostly attributable to the Great Recession of 2007-2009 and the sluggish recovery that followed. These losses were offset by faster growth in hospital prices, which accelerated slightly from 0.9 % in 2015 to 1.2 % in 2016.

US health care spending increased to $3.3 trillion in 2016, with out-of-pocket health care costs borne directly by consumers rising 3.9 percent - the fastest rate of growth since 2007.

Medicaid spending on physician and clinical services saw a larger slowdown, increasing only 4.1% in 2016 after growing 9.9% in 2015 and 21.8% in 2014, due in part to slower enrollment growth.


Spending on home health services also contracted in 2016, with the 4.0% gain to $92.4 billion falling short of the 5.8% growth seen in 2015.

The CMS official attributed the slowdown in 2016 to people using medical goods and services when initially added to Medicaid and private insurance. Study authors were unable to say during a media call Wednesday if HHS efforts to transform Medicare into a value-based program had any impact on the slowing growth rate. However, spending growth slowed to 3.6 percent from 4.8 percent in 2015, driven by slower spending per enrollee on both the fee-for-service and Medicare Advantage portions of the program. The report noted that Medicaid's costs per enrollee grew less than 1 percent in 2016. Spending grew by 4.3 percent past year, compared to 5.1 percent and 5.8 percent growth in 2014 and 2015, respectively.

Retail prescription drugs expenditures reached $328.6 billion and represented 10% of overall health spending. Spending growth for clinical services (8.2%) outpaced growth in spending for physician services (4.6%) for the twelfth consecutive year.

What's more, according to the CMS actuaries, the slower growth in health care spending in 2016 was more in line with the average annual rate of growth during the period 2008-15 and was higher than growth for the overall economy. Physician and clinical servicesPhysician and clinical services spending slowed from a growth rate of 5.9% in 2015 to 5.4% in 2016.

In all, payers spent $162.7 billion on care at nursing homes and continuing care retirement communities (CCRCs), an increase of 2.9% from 2015. 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.

Health care has consumed an ever-growing share of the economy and of spending by the government and the private sector for decades.

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