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US Health Care Spending Decreases in 2016

08 December 2017

But because health spending grew faster, as it has for years, than overall gross domestic product, health spending's share of the economy increased to 17.9 percent in 2016, up from 17.7 percent of the economy the year before. Dating back to 1960, the NHEA measures annual US expenditures for health care goods and services, public health activities, government administration, the net cost of health insurance, and investment related to health care. Physician and clinical services and prescription drug spending growth slowed, while Medicare hospital care spending remained relatively stable in 2015 and 2016.

On Wednesday, a federal study conducted by the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS) showed that while the overall spending for health services increased in 2016 ($3.3 trillion), the pace at which spending for healthcare slowed down drastically compared to the previous two years.

Medicaid expenditures reached $565.5 billion in 2016, accounting for 17% of total national health expenditures.

The 8.2% spending growth for clinical services almost doubled the 4.6% growth in spending for physician services for the twelfth consecutive year.

"The faster growth in 2016 was due in part to a continued shift towards enrollment in high-deductible health plans, which was somewhat offset by a continued decrease in the number of uninsured in 2016", according to CMS. Total expenditures in this category reached $664.9 billion, or 20% of overall healthcare spending. Medicaid spending hit $565.5 billion previous year, making up 17% of all national health expenditures. "When you add people to the rolls of Medicaid and private health insurance they are going to be using all types of medical goods and services".

The total out-of-pocket health care spending in 2016 increased by 3.9%, a one percent increase from 2015's out-of-pocket rate of 2.8%.

Authors of the CMS report said spending growth slowed past year for all three major categories of medical goods and services - hospitals, physician/clinical services and retail prescription drugs - for the first time since 2010. Private health insurance continued to be the largest payer for health care goods and services in the United States in 2016-accounting for just over one-third of total healthcare spending. In contrast, Medicaid spending had shot up by 11.5 percent in 2014, and 9.5 percent in 2015.

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.

Medicare, the federally run program that provides health coverage to primarily older Americans, saw spending grow by 3.6 percent in 2016, to $672.1 billion. CMS attributed the previous large increases to the introduction of new drugs and higher prices for existing drugs, particularly those used to help treat hepatitis C.

US Health Care Spending Decreases in 2016