Growth of health care spend­ing slowed last year

The Atlanta Journal-Constitution - - NATION & WORLD - Robert Pear

WASHINGTON — The growth of na­tional health spend­ing, which surged as mil­lions of Amer­i­cans gained cov­er­age un­der the Af­ford­able Care Act, slowed last year, the Trump ad­min­is­tra­tion said Thurs­day.

Health spend­ing in the United States to­taled $3.5 tril­lion last year, up 3.9 per­cent from 2016, or about $10,740 a per­son. It ac­counted for 17.9 per­cent of the econ­omy, of­fi­cials said.

But the rate of in­crease for the ma­jor cat­e­gories — drugs, doc­tors and hos­pi­tals — was more mod­est than in re­cent years.

For the first time in sev­eral years, health spend­ing grew at about the same rate as the econ­omy as a whole in 2017. So the share of the econ­omy de­voted to health care sta­bi­lized. By con­trast, over the past few decades, health spend­ing has gen­er­ally grown faster than the econ­omy.

The 3.9 per­cent in­crease last year — down from 4.8 per­cent in 2016 — was the low­est since 2013.

“The rel­a­tively low rate of health spend­ing growth in 2017 was sim­i­lar to the av­er­age an­nual growth dur­ing 2008-13, which pre­dated the ma­jor cov­er­age ex­pan­sions,” said Anne Mar­tin, an econ­o­mist in the of­fice of the ac­tu­ary at the Depart­ment of Health and Hu­man Ser­vices.

One fac­tor that may have con­trib­uted to the slower growth in health spend­ing is that the share of the pop­u­la­tion with health in­sur­ance fell slightly last year, Mar­tin and her col­leagues wrote in the jour­nal Health Af­fairs.

In ad­di­tion, more peo­ple with in­sur­ance have high-de­ductible health plans, which tend to make them cost-con­scious be­cause they are per­son­ally re­spon­si­ble for a larger share of their med­i­cal costs.

Health spend­ing grew rapidly in 2014 and 2015 be­cause of the ex­pan­sion of Med­i­caid and pri­vate in­sur­ance cov­er­age un­der the Af­ford­able Care Act, as well as the use of ex­pen­sive but highly ef­fec­tive new drugs to treat hep­ati­tis C.

The Af­ford­able Care Act was signed by Pres­i­dent Barack Obama in 2010, and the main pro­vi­sions ex­pand­ing cov­er­age took ef­fect in 2014.

Fed­eral spend­ing on health care shot up nearly 11 per­cent in 2014, mainly be­cause of the ex­pan­sion of Med­i­caid, but the growth has slowed ev­ery year since then, the re­port said. Fed­eral spend­ing on health care to­taled nearly $1 tril­lion last year, and that does not count the huge tax sub­si­dies for health care and cov­er­age.

Spend­ing on Med­i­caid, which now cov­ers more than 70 mil­lion low-in­come peo­ple and is fi­nanced jointly by the fed­eral gov­ern­ment and the states, con­tin­ued to grow in 2017, reach­ing a total of $582 bil­lion, the re­port said. But the rate of growth slowed for the third straight year.

Med­i­caid spend­ing — the total of fed­eral, state and lo­cal funds com­bined — in­creased last year by 2.9 per­cent, fol­low­ing growth of 11.8 per­cent in 2014, then 9 per­cent in 2015 and 4.2 per­cent in 2016, the ad­min­is­tra­tion re­ported.

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