US Healthcare Spending Hit $3.3T in 2016

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While the rate of healthcare spending decrease previous year, the overall sending for health services continued to increase.

"The slowdown on overall healthcare spending was broadly based, as spending for the largest categories by payer and by goods and services decelerated", report lead author Micah Hartman said Wednesday in a media availability.

In 2014 and 2015, spending increased 5.1% and 5.8%, respectively, as the Affordable Care Act expanded health insurance coverage through Marketplace plans and Medicaid.

One exception to the slowdown in 2016 was spending on out-of-pocket health charges - including, copayments and deductibles, and spending not covered by insurance - which grew at their fastest rates since 2007. State and local Medicaid expenditures grew 3.2%, while federal Medicaid expenditures grew 4.4% in 2016. Changes in the age and gender mix of the population accounted for a 0.6 percentage point of the growth in per capita health spending.

In an online report and a media conference call, CMS attributed faster spending growth in 2014 and 2015 to the implementation of the federal Affordable Care Act and its related Medicaid expansion, which together extended health insurance to almost 19 million people. For major payers, Medicare spending growth was flat for the fourth consecutive year.

USA health spending rose to $3.3 trillion in 2016, but the pace slowed compared to the previous two years as demand for drugs, hospital care and physician services weakened, according to a federal study released Wednesday.

On a per capita basis, national health spending grew at 3.5%, reaching $10,348 in 2016.

Spending on retail prescription drugs grew 1.3 percent in 2016 compared with 12.4 percent in 2014 and 8.9 percent in 2015.

Medicaid, which provides health coverage to primarily poor people, is jointly run by the federal government and individual states. 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. Medicare spending had increased by 4.8 percent in 2015 and 4.9 percent in 2014.

Still, health spending continues to outpace overall spending on goods and services, which increased 2.8 percent in 2016. Slower growth was due to a leveling in the number of people gaining health coverage past year, according to the researchers. The slowing was driven by fewer new drugs being introduced and less spending on pricey treatments for hepatitis C.

On a per enrollee basis, Medicaid spending increased 0.9% compared to 4.5% in 2015, which reflects increased efforts by states to control costs, a decline in supplemental payments to hospitals, and a decrease in per enrollee costs for newly eligible adults. On a per capita basis, national health spending grew at 3.5%, reaching $10,348 a year ago. The share of spending made up of retail prescription drug is similar to what it was in 2009, CMS said.

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