Dec. 3, 2014 - National health spending grew 3.6 percent in 2013, the
lowest annual increase since the Centers for Medicare and Medicaid
Services (CMS) began tracking the statistic in 1960, officials said
Spending slowed for private health insurance, Medicare, hospitals,
physicians and clinical services and out-of-pocket spending by
consumers. However, it accelerated for Medicaid and for prescription
drugs, according to the
published online by the journal Health Affairs.
Health care spending has grown at historically low rates for the past
five years, which is consistent with declines generally seen during
economic downturns, such as the Great Recession that crippled the U.S.
economy at the end of 2007. Looking ahead, “the key question is whether
health spending growth will accelerate once economic conditions improve
significantly; historical evidence suggest that it will,” noted the
authors, who are from the CMS Office of the Actuary.
They also pointed out, however, that in the near term, the health sector
will “undergo major changes that will have a substantial impact” on
consumers, providers, insurers and sponsors of health care. These are
the result of the health law’s creation of online marketplaces, its
expansion of Medicaid, a shared federal-state health care program for
the poor and disabled, and restraints the law made to the Medicare
program, the analysts found.
“The balance of these and many other factors over the next few years
will determine how the historically low health spending growth from 2009
to 2013 is viewed: as the temporary aftermath of the great recession or
the beginning of a new era,” the authors wrote.
The study found that health care spending rose to $2.9 trillion, or
$9,255 per person, in 2013. As a share of gross domestic product, health
care remained at 17.4 percent, the same share since 2009, the CMS
Spending on Medicare grew 3.4 percent in 2013, down from the 4 percent
growth in 2012. The difference was due mostly to slower growth in
enrollment and spending changes included in the health care law,
including reductions in federal payments to the private Medicare
Advantage plans that offer an alternative to traditional Medicare.
The automatic 2 percent federal budget payment cuts, known as
sequestration, also played a role in reducing Medicare spending, which
was nearly $586 billion in 2013. The program accounted for 20 percent of
national health spending, according to the report. Fee-for-service
expenditures, which account for 72 percent of total Medicare spending,
were up 1.7 percent in 2013. Medicare Advantage spending increased 7.8
percent in 2013, a slower growth rate that the 10.6 percent increase in
The growth in Medicare per-enrollee spending was relatively flat,
increasing 0.2 percent after a growth rate of less than 0.1 percent in
2012. The authors credited younger and healthier baby boomers entering
Medicaid spending increased 6.1 percent in 2013, following growth rates
of 2.5 and 4 percent, respectively, in 2011 and 2012. A variety of
factors, including increases in hospital care – which accounts for 36
percent of Medicaid spending — contributed to the cost increase. The
federal government and state and local governments spent $449.4 billion
in 2013 on Medicaid, accounting for 15 percent of total national health
Medicaid enrollment grew 2.7 percent during that time frame, the first
acceleration since 2009. Some of the 2013 increase was due to new
beneficiaries who enrolled as part of the health law’s provision that
allowed states to expand their Medicaid programs ahead of the 2014
Other key takeaways from the report include:
– Nearly 190 million people – or 60 percent of the population – were
covered by private health insurance in 2013. Premiums grew 2.8 percent,
compared to an increase of 4 percent in 2012. Low overall enrollment
growth, greater usage of high deductible plans and other benefit design
changes and the health law’s medical loss ratio and rate review
provisions contributed to the decline, CMS found. Private health
insurance enrollment increased 0.7 percent last year, the third straight
year of growth.
– Consumer out-of-pocket spending, including co-payments and deductibles
or payments for services not covered by a consumer’s health insurance,
was $339.4 billion in 2013, or 12 percent of national health
expenditures. The 2013 growth was down from the 3.6 percent growth in
both 2011 and 2012.
– Spending for physician and clinical services grew 3.8 percent in 2013
to $586.7 billion, a slowdown from 2012 when spending grew 4.5 percent.
Expenditures for hospital care increased 4.3 percent in 2013, slower
than the 5.7 percent rate of growth in 2012. Total spending growth for
retail prescription drugs rose 2.5 percent last year, compared to 0.5
percent in 2012. Drug spending growth increased in 2013 for several
reasons, among them higher prices for brand-name and specialty drugs.
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