In 2015, per-capita health care spending grew by 5.0 percent and overall health spending grew by 5.8 percent, according to a study by the Office of the Actuary at the Centers for Medicare & Medicaid Services (CMS) published today as a Web First by Health Affairs. Those annual rates continue to be below the rates of most years prior to passage of the Affordable Care Act. And, even as millions of people gained coverage, per-enrollee spending growth in private health insurance and Medicare continue to be well below the average in the decade before passage of the Affordable Care Act.
The report concludes that 2015 expenditure growth was primarily the result of increased use and intensity of services as millions gained health coverage, as well as continued significant growth in spending for retail prescription drugs. Spending on prescription drugs increased 9.0 percent in 2015, lower than the 12.4 percent growth in 2014, yet significantly higher compared to 2.3 percent growth in 2013. On a per-enrollee basis, overall spending increased by 4.5 percent for private health insurance, 1.7 percent for Medicare, and 3.8 percent for Medicaid.
“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,” said CMS Acting Administrator Andy Slavitt. “As millions more Americans have obtained health insurance, per-person cost growth remains at historically modest levels.”
The report noted that over a two-year period, 20.0 million individuals either gained private health insurance coverage or enrolled in the Medicaid program, primarily as the result of the Affordable Care Act. The share of the population with health coverage increased from 86.0 percent in 2013 to 90.9 percent in 2015.
Health care spending grew 2.1 percentage points faster than the overall economy in 2015, resulting in a 0.4 percentage-point increase in the health spending share of gross domestic product (GDP) – from 17.4 percent in 2014 to 17.8 percent in 2015. In the decade prior to the passage of the Affordable Care Act (2000-2009), health care spending increased 2.8 percentage points faster than GDP, on an annual average basis.
Additional highlights from the report:
- Total per-enrollee private health insurance spending increased by 4.5 percent in 2015, compared to average growth in per-enrollee spending of 7.4 percent during 2000-2009. Overall, private health insurance expenditures (33 percent of total health care spending) reached $1.1 trillion in 2015, and increased 7.2 percent in 2015. The faster rate of growth reflected increased enrollment in private health insurance associated with coverage expansions under the Affordable Care Act, and a notable increase in the enrollment in employer-sponsored plans.
- Per-enrollee Medicare spending increased by 1.7 percent, about the same rate as in 2014 and below the average annual growth in per-enrollee spending during 2000-2009 of 7.0 percent (or 5.8 percent when Medicare Part D, which was implemented in 2006, is excluded). Medicare spending, which represented 20 percent of national total health care spending in 2015, grew 4.5 percent to $646.2 billion, slightly slower than the 4.8 percent growth in 2014 even as the leading edge of the baby boom generation joined Medicare. The 2015 rate of growth reflected mixed trends among services compared to 2014 as Medicare hospital spending growth slowed and nursing home and home health care spending grew faster. Medicare prescription drug spending continued to grow by double digits with an 11.0 percent increase in 2015 following a 14.5 increase in 2014.
- Overall Medicaid spending and enrollment grew at a slower rate in 2015 than in 2014 with per-enrollee Medicaid spending increasing 3.8 percent. Medicaid spending, which totaled $545.1 billion, accounted for 17 percent of total spending on health care. Similarly, growth in Medicaid enrollment slowed to 5.7 percent in 2015, significantly lower than the 2014 increase of 11.1 percent.
- Out-of-pocket spending ($338.1 billion), which includes direct consumer payments such as copayments, deductibles, and spending not covered by insurance, excluding premiums, grew 2.6 percent in 2015, compared to average annual growth in out-of-pocket spending during 2000 and 2009 of 4.6 percent. From 2008 through 2015, average annual growth of out-of-pocket spending was 1.9 percent, lower than the average annual growth in overall health spending of 4.3 percent during that same time period. As a result, the share of out-of-pocket spending of total health expenditures fell from 13 percent in 2007 to 11 percent in 2015.
- Retail prescription drug spending continued to outpace overall health expenditure growth in 2015, increasing 9.0 percent to $324.6 billion after rising 12.4 percent in 2014. Growth in prescription drug spending was faster than that of any other service in 2015. Recent rapid growth was due to increased spending for new medicines (particularly for specialty drugs such as those used to treat hepatitis C), price growth in existing brand-name drugs, increased spending on generics, and a decrease in the number of expensive blockbuster drugs whose patents expired.
- In 2015, the federal government and households accounted for the largest shares of spending (29 percent and 28 percent respectively), followed by private businesses (20 percent), and state and local governments (17 percent).
The CMS Office of the Actuary’s report will appear on the CMS website at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsHistorical.html.
An article about the study is also being published by Health Affairs as a Web First (http://content.healthaffairs.org/lookup/doi/10.1377/hlthaff.2016.1330) and will also appear in the journal’s January issue.