Fewer insured may have helped slow health spending growth in 2017



Health care spending as a percentage of gross domestic product remained relatively stable in 2017, despite a slowdown in the growth of spending.

Paper money spread out. utah778/Thinkstock

Total health care spending in the United States was $3.5 trillion in 2017, an increase of 3.9% from 2016, according to data released Dec. 6 by the Centers for Medicare & Medicaid Services.

The growth rate was down from that of 2016 (4.8%) but similar to growth rates experienced during 2008-2013, according to the research article in Health Affairs.

“The slower growth in health care spending in 2017 resulted primarily from slower growth in hospital care, physician and clinical services, and retail prescription drugs, with residual use and intensity of these goods and services contributing substantially to the trend,” Anne B. Martin, an economist in the CMS Office of the Actuary’s National Health Statistics Group, and her colleagues wrote.

The report notes that slower growth in the use and intensity of health care goods and services in 2017 “may have been affected by slower growth in overall health insurance enrollment, as the insured share of the population fell from 91.1% in 2016 to 90.9% in 2017.”

Spending on hospital care increased 4.6% to $1.1 trillion in 2017 and accounted for 33% of total health care spending; however, growth was slower than in the previous year (5.6%). Ms. Martin and her colleagues noted that growth in outpatient visits slowed while growth in inpatient days increased at about the same rate and prices in hospital care grew in 2017 to 1.7% from 1.2% in the previous year.

Spending on physician and clinical services grew 4.2% in 2017 to $694.3 billion and accounted for 20% of total health care spending. The growth rate is down from the previous year (5.6%) and a recent peak of 6% in 2015.

“Although spending growth for both physician services and clinical services slowed in 2017, the growth rate for the latter (5.0%) continued to out pace the rate for the former (3.9%), as spending for most types of outpatient care centers contributed to the stronger growth in spending for clinical services,” Ms. Martin and her colleagues reported.

They attributed the slowdown to non-price factors, such as slower growth in the use and intensity of physician and clinical services, although price growth for physician and clinical services increased 0.4% in 2017, up from 0.2% in 2016.

Spending on retail prescription drugs grew 0.4% in 2017 to $333.4 billion and accounted for 10% of total national health spending. It is the slowest growth rate increase since 2012, a year that saw a number of blockbuster drugs lose patent protection. This was down from a growth rate of 2.3% in 2016 and down from recent rates of 12.4% in 2014 and 8.9% in 2015.

“Slower growth in non-price factors, such as the use and mix of retail prescription drugs – and, to a lesser extent, in retail prescription drug prices – contributed to the slower overall growth in retail prescription drug spending in 2017,” according to the authors. Key factors included slower growth in the number of prescriptions dispensed, the continued shift to lower-cost generics, and slower growth in the volume of high-cost drugs, particularly those used to treat hepatitis C. Price decreases in generics and lower increases for existing brand-name drugs also contributed to the lower spending growth in 2017.

Ms. Martin and her colleagues highlighted the slower growth rate in the number of prescriptions (1.8% in 2017, down from 2.3% in 2016) “resulted in large part from a decline in the number of prescriptions dispensed for drugs used to treat pain.”

Medicare spending, which represents 20% of all national health care spending in 2017 ($705.9 billion), grew 4.2%, a slight decline from the 4.3% growth in 2016. Enrollment growth slowed slightly to 2.5% in 2017 from 2.7% in the previous year, while in the same time frame, per-enrollee expenditures increased slightly to 1.7% from 1.6%. Slower growth in fee-for-service Medicare spending was offset by faster growth in spending by Medicare private health plans.

Medicaid spending reached $581.9 billion (17% of national health care spending), and the growth rate slowed for the third straight year, increasing 2.9% in 2017 versus 4.2% in 2016. The slower growth “was influenced by a deceleration in enrollment growth and a reduction in the Medicaid net cost of health insurance as the federal government recovered payments from managed care organizations based on their favorable prior-period experience,” the authors stated. Enrollment growth has been decelerating following a peak of growth of 11.9% in 2014 because of states that elected to expand Medicaid eligibility, which was followed by 3 years of slower growth rates of 4.9%, 3.0% and 2.0% in 2015, 2016, and 2017, respectively. Per-enrollee spending also slowed to 0.9% growth in 2017 from a rate of 1.2% in 2016, attributed to “the decline in government administration and the net cost of insurance.”

SOURCE: Martin A et al. Health Aff. 2018. doi: 10.1377/hlthaff.2018.05085.

Next Article: