Spending on healthcare grew last year at the fastest pace since the start of The Great Recession, a federal report says.
Expanded health coverage, increased service utilization and rising prescription drug costs drove the country's healthcare spending growth to 5.8% last year.
It was the highest hike in healthcare expenditures since 2007, according to a report Friday by the Centers for Medicare & Medicaid Services' Office of the Actuary.
Spending on prescription drugs and healthcare coverage expansion under the Patient Protection and Affordable Care Act were key drivers of last year's spending spike, a co-author of the actuary report in the journal Health Affairs said during a media conference call Friday.
"If we look at recent history, we had health spending grow at historically low rates between 2009 and 2013, during and just after The Great Recession. Between 2010 and 2013 healthcare spending grew at about the same rate as the overall economy as measured by GDP. That was a relatively stable growth rate," said Aaron Catlin, deputy director of the National Health Statistics Group, CMS Office of the Actuary.
"Then in 2014 and 2015, we had the one-time effect of the ACA-expansion of coverage, and that occurred at the same time that we had the emergence of high-cost specialty drugs," said Catlin.
Last year, total national healthcare expenditures reached $3.2 trillion, with per capita spending pegged at $9,990. In 2014, healthcare spending increased 5.3%.
PPACA-fueled growth of healthcare coverage through Medicaid expansion and the individual insurance market exchanges also drove national healthcare expenditures higher in 2015, the report says. "Increased use and intensity, associated in part with expanded insurance coverage, drove the growth in spending for hospital care and physician and clinical services, which together accounted for 52% of total national health spending in 2015."
20 Million Insured via PPACA
"In 2013, the insured share of the population was 86.0%, which is approximately where it had been in 2008. However, from 2013 to 2015 the number of uninsured individuals fell by 15.0 million, and the insured share of the population reached 90.9%," says the report.
"Between 2014 and 2015, nearly 10 million (9.7 million) people gained private health insurance coverage (average growth of 2.5%), while an estimated 10.3 million more people enrolled in the Medicaid program (average growth of 8.4%)."
In a prepared statement, CMS acting Administrator Andy Slavitt said last year's spike in total healthcare spending should be viewed in a positive light because it reflects improved access to affordable care.
"Our significant progress in reducing the nation's uninsured rate, while providing strong protections for Americans if they get sick, would not be possible without the Affordable Care Act," he said. "As millions more Americans have obtained health insurance, per-person cost growth remains at historically modest levels."
From the payer perspective, the actuary report shows 2015 per capita healthcare spending growth rates ranged in the low single digits:
- Commercial insurance at 5.2%,
- Medicaid at 3.8%
- Medicare at 1.7%
Higher Spending on Clinical Services
According to the CMS report, "Total expenditures for physician and clinical services grew 6.3% in 2015, reaching $634.9 billion. This was an increase from the growth of 4.8% in 2014 and the first growth rate above 6% in ten years. The faster growth in spending on physician and clinical services was driven by growth in non-price factors, such as residual use and intensity of services. Increased insurance coverage through private health insurance and Medicaid contributed to this growth in non-price factors."
In terms of gross domestic product (GDP), healthcare expenditures accounted for 17.8% of the national economy last year, up slightly from 17.4% in 2014.
Even though upward spending pressure from health coverage expansion is expected to have a short-term impact, healthcare expenditures are likely to continue to account for an ever-larger share of the national economy, the report says.
It describes the 2014 to 2015 period as "unique, given the significant changes in health insurance coverage that took place," and projects spending on healthcare to continue grow as a share of the overall economy over the next decade, influenced by "the aging of the population, changing economic conditions, and faster medical price growth."