Health expenditures slow to lowest growth rate in 53 years

December 4, 2014

Total national health spending slowed from 4.1% in 2012 to 3.6% in 2013, the slowest rate of growth since it was first tracked in 1960, according to a report from the Office of the Actuary (OACT) at the Centers for Medicare and Medicaid Services (CMS).

Total national health spending slowed from 4.1% in 2012 to 3.6% in 2013, the slowest rate of growth since it was first tracked in 1960, according to a report from the Office of the Actuary (OACT) at the Centers for Medicare and Medicaid Services (CMS).

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The report also showed that national health expenditures reached $2.9 trillion in 2013, or $9,255 per person.

The slowdown coincides with slower growth in the country’s Gross Domestic Product (GDP), which has averaged 3.9% since 2010, according to the report.

 

“This report is another piece of evidence that our efforts to reform the health care delivery system are working,” said CMS Administrator Marilyn Tavenner. “To keep this momentum going, we are continuing our efforts to shift toward paying for care in ways that reward providers who achieve better outcomes and lower costs.”

NEXT: Government spending declines in spite of ACA rollout

 

In spite of the rollout of the massive Affordable Care Act (ACA) in 2010, the share of health spending financed by the federal government has actually declined since that time, from 28% in 2010 to 26% in 2013. State and local government spending increased 1% during that timeframe, which the report attributes mainly to the expiration of American Recovery and Reinvestment Act funding for Medicaid.

According to the report, the ACA has exerted downward pressure in 2013 through:

  • productivity adjustments for Medicare fee-for-service payments;

  • reduced Medicare Advantage base payment rates;

  • increased Medicaid prescription drug rebates;

  • the medical loss ratio requirement for private insurers.

Upward pressure was exerted by the ACA during the same timeframe through:

  • early Medicaid expansion initiatives;

  • a temporary increase in Medicaid primary care provider payments;

  • reducing the size of the Medicare Part D donut hole;

  • the implementation of prescription drug industry fees.

Other findings of the report include:

  • Medicare spending grew 3.4% to $585.7 billion in 2013, a slowdown from growth of 4% in 2012.

  • Private health insurance premium spending increased 2.8% in 2013 to $961.7 billion.

  • Medicaid spending reached $449.4 billion in 2013, growing 6.1% from the previous year.

  • Out-of-pocket spending on copayments, deductibles, services not covered by insurance, and spending by those without health insurance grew 3.2% in 2013 to $339.4 billion.

  • Hospital spending increased 4.3% to $936.9 billion in 2013 compared to 5.7% growth in 2012.

  • Physician and clinical services expenses increased 3.8% in 2013 to $586.7 billion, down from a 4.5% growth rate in 2012.

  • Retail prescription drug spending accelerated 2.5% in 2013 from .5% in 2012.