By Louise Radnofsky 

WASHINGTON -- U.S. health spending grew faster than expected in 2015 as consumers recovered from the economic downturn and the Affordable Care Act's coverage provisions took hold, according to federal statistics released Friday.

National health expenditures grew at a rate of 5.8% over the year, more than the 5.5% estimated by the Centers for Medicare and Medicaid Services in future spending projections offered this summer.

The trajectory of health spending is closely watched because of its significance in the U.S. economy. Health spending accounted for 17.8 % of the nation's gross domestic product in 2015, the CMS data said, up from 17.4% in 2014. The findings were published in the journal Health Affairs.

Through 2013, spending growth had been at the lowest rates since the government began tracking health-care spending in the 1960s, which health-care economists attributed largely to the economic downturn.

They had puzzled over whether spending would come back as the economy strengthened. Some had guessed consumer behavioral changes cutting back on their use of health-care services might be permanent; others warned of potential pent-up demand once people regained health insurance and money for out-of-pocket payments.

The current data suggest the pace of spending did begin to pick up again after the economy rebounded, with prescription drug price growth and an aging baby boom generation contributing to the acceleration. Growth in prescription drug spending was faster than that of any other service in 2015, CMS said. Spending on physician and clinical services grew at a rate of 6.3%, the first time in a decade the figure had topped 6%.

The Affordable Care Act's impact on expanding coverage to millions more Americans after 2014 through a combination of private insurance and Medicaid, the federal-state program for the poor, is also thought to have had an impact in increasing demand for health services.

"Over the last fifty-five years, the largest increases in health spending's share of the U.S. economy have typically occurred around periods of economic recession," said Anne Martin, a CMS economist who is the first author of the Health Affairs article.

"While the 2014 and 2015 increases occurred more than five years after the nation's last recession ended, they coincided with 9.7 million individuals gaining private health insurance coverage and 10.3 million more people enrolling in Medicaid coverage. An additional contributing factor is the rapid growth in retail prescription drug spending."

CMS economists said their summer estimates for spending growth in 2015 had underestimated spending growth in private health insurance, and that drove the change.

President-elect Donald Trump and congressional Republicans have said they plan to dismantle the 2010 Affordable Care Act and replace it with alternative ways of extending insurance coverage to people who don't get it through an employer or government program such as Medicare.

Projections for spending growth in future years have been based on what would happen if the Affordable Care Act remained in place. With that assumption, national health spending growth has been projected to grow at an average of 5.8% a year through 2025.

Write to Louise Radnofsky at louise.radnofsky@wsj.com

 

(END) Dow Jones Newswires

December 02, 2016 14:25 ET (19:25 GMT)

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