Growth in health spending slows

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Thursday, December 7, 2017

WASHINGTON – National health spending increased 4.3% in 2016 compared to 5.8% in 2015, according to a new study by the Office of the Actuary at CMS.

The health spending share of the economy was 17.9% in 2016.

Previously, the health spending share of the economy increased 0.5 percentage point from 17.2% in 2013 to 17.7% in 2015.

The increases in health spending share of the economy were attributed to coverage expansion for 8.7 million individuals gaining private health insurance under the Affordable Care Act and 10.2 million gaining Medicaid coverage.

Medicare

Medicare spending grew 3.6% to $672.1 billion in 2016, slower growth than 2015 (4.8%) and 2014 (4.9%). The slower growth in 2016 was due to slower growth in spending for both fee-for service (1.8% vs. 2.2% in 2015), and Medicare Advantage (7.4% vs. 11.1% in 2015).

Medicaid

Medicaid spending growth grew 3.9% to $565.5 billion in 2016. State and local Medicaid expenditures grew 3.2%, while federal Medicaid expenditures grew 4.4% in 2016. Medicaid spending grew 11.5% in 2014 and 9.5% in 2015, due in part to the ACA.

Private health insurance

Private health insurance spending increased 5.1% to $1.1 trillion in 2016, a decrease from the 6.9% in 2015. The deceleration was largely driven by slower enrollment growth in 2016 after two years of faster enrollment growth due to ACA coverage expansion.