U.S. Healthcare Spending Grew 4.6% in 2019, Hit $3.8T

The rate of growth in 2019 was down slightly from the 4.7% rate in 2018 and consistent with the average annual spending growth rate of 4.5% since 2016.

Healthcare spending in the United States grew 4.6% in 2019, hitting $3.8 trillion, or $11,582 per person, federal actuaries announced on Wednesday.

The rate of growth in 2019 was down slightly from the 4.7% rate in 2018 but consistent with the average annual spending growth rate of 4.5% since 2016, according to a new analysis from the Office of the Actuary at the Centers for Medicare and Medicaid Services.

The report, which was published online Wednesday afternoon in Health Affairs, notes that faster growth in personal healthcare spending was offset by a drop in the net cost of health insurance, mostly because of the suspension of the individual mandate.

The report covers 2019 and does not include the effects of the coronavirus pandemic on healthcare spending.

Healthcare spending grew somewhat faster than the 4% growth in the gross domestic product, and healthcare spending as a share of the overall economy nudged up slightly to 17.7% from 17.6% in 2018, the analysis shows.

"Healthcare spending in 2019 increased at about the same rate as it had in 2018 and was similar to the average annual growth since 2016," said study first author Anne Martin, an economist in the CMS Office of the Actuary.

"This relative stability in healthcare spending growth over the last four years preceded the COVID-19 pandemic in 2020," Martin said. "The full impact of the pandemic on the healthcare sector is still not known, but it will certainly have profound consequences on the provision and consumption of healthcare in 2020 and perhaps beyond."

Personal healthcare spending accounted for 84% of total healthcare spending in 2019 and grew 5.2 %—compared with 4.1% growth in 2018. Martin said the increase was driven mostly by accelerated spending growth for hospital care, retail prescription drugs, and physician services.

National health spending grew 4.1% per capita in 2019, similar to the 4.2% increase in 2018, reflecting faster growth in the residual use of healthcare goods and services and slower growth in medical prices.

Medical prices increased 1.1% in 2019, half the rate of 2.3% growth seen in 2018. However, residual use and intensity of services increased 2.5% in 2019, which is faster than the 1.4% growth seen in 2018.

The rate of growth linked with changing demographics held steady at 0.5% in 2019.

A detailed breakdown of major spending growth in 2019 found that:

• Hospital spending grew 6.2% and reached $1.2 trillion in 2019, representing 31% of overall healthcare spending, compared with 4.2% in 2018. However, hospital prices rose 2% compared with 2.4% in 2018, while nonprice factors such as the use and intensity of goods and services grew 4.2%, compared with 1.8 % in 2018.
   
• Physician and clinical services grew 4.6% and reached $772.1 billion, or 20% of total healthcare expenditures. Spending grew 4.6%, up from 4% in 2018. Nonprice factors, such as the use and intensity of services, were the largest contributor to the acceleration in expenditure growth, as price growth remained steady in 2019 at about 0.8%. The 5.8% pending growth for clinical services outpaced spending growth for physician services 4.2%.
   
• Private health insurance grew 3.7% and reached $1.2 trillion and accounted for 31% of total national health spending. Private health insurance spending increased 3.7% in, which was slower than the 5.6% growth rate seen in 2018, and driven largely by the suspension of the Affordable Care Act's Individual Mandate.
  
  Private health insurance enrollment grew 0.5%. Per enrollee spending increased 3.2%, half the 6.4% growth of 2018.
   
• Medicare spending grew 6.7% and reached $799.4 billion in 2019, representing 21% of total national healthcare expenditures. Medicare's 6.7% spending growth was up slightly from the 6.3% growth in 2018.
  
  Medicare enrollment grew 2.6% in 2018 and 2019. Per enrollee Medicare expenditures grew 4% in 2019 compared with 3.6% in 2018. Fee-for-service procedures accounted for 61% of Medicare spending in 2019, down from 67% in 2016, which Martin said reflects the shrinking FFS share of total Medicare enrollment over the past four years.
  
  FFS Medicare spending grew 2.2%, down from 3% in 2018. Medicare Advantage spending accounted for 39% spending in 2019 and increased 14.5%, up from 12.6% growth in 2018.
  
  Per capita enrollee spending in Medicare Advantage grew 6.3%% in 2019, almost three times the 2.4% per capita growth rate of Medicare FFS.
  
  Medicaid spending grew 2.9% and reached $613.5 billion, accounting for 16% of national health spending, and down slightly from the 3.1% growth in 2018.
  
  Martin said the steady growth in 2019 was owing to faster spending growth for most goods and services and an offsetting drop in the net cost of insurance, thanks largely to the suspension of penalties associated with the Affordable Care Act's individual mandate.