Overall national health expenditures grew at an annual rate of 3.7 percent in 2012, marking the fourth consecutive year of low growth, the Centers for Medicare & Medicaid Services (CMS) Office of the Actuary reported today. Health spending as a share of gross domestic product fell slightly from 17.3 percent in 2011 to 17.2 percent in 2012.
“For the second straight year, we have seen overall health care costs grow slower than the economy as a whole. This is good news,” said CMS Administrator Marilyn Tavenner. “We will continue to work with tools given to us by the Affordable Care Act that will both help us control costs for taxpayers and consumers while increasing the quality of care.”
The report found that the continued low growth in 2012 was driven by slower growth in prescription drug, nursing home, private health insurance, and Medicare expenditures. The report from CMS’ Office of the Actuary also found that the Affordable Care Act (ACA) contributed to the slow growth for the Medicare program in 2012, but had a limited impact on overall spending as reforms were still being implemented in 2012.
The report’s findings include:
Private health insurance spending growth remained low. Private health insurance spending continued to grow at a low rate, increasing 3.2 percent in 2012 compared to 3.4 percent growth in 2011.
Medicare spending growth continued to be low. Despite a large uptick in Medicare enrollment, Medicare spending growth slowed slightly in 2012, increasing by 4.8 percent compared to 5.0 percent growth in 2011. Total Medicare spending per enrollee grew by only 0.7 percent in 2012.
Prescription drug spending growth was low. Retail prescription drug spending slowed in 2012, growing only 0.4 percent as the result of numerous drugs losing their patent protection, leading to increased sales of lower-cost generics.
Nursing home spending growth slowed. Spending for freestanding nursing care facilities and continuing care retirement communities increased by only 1.6 percent in 2012, down from 4.3 percent growth in 2011, due to a one-time Medicare rate adjustment for skilled nursing facilities.
Medicaid spending continued to grow at a historically low rate. Total Medicaid spending grew 3.3 percent in 2012. While an increase over 2011, this increase still represents historically low overall growth rates tied to improved economic conditions, as well as efforts by states to control costs.
The report also found accelerated growth in hospital and physician and clinical services spending, and slightly faster growth in out-of-pocket spending, 3.8 percent in 2012 compared to 3.5 percent in 2011.