U.S. Health Spending Rose Faster Than Expected in 2015 -- Update
December 02 2016 - 2:40PM
Dow Jones News
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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