In 2014, healthcare spending in the U.S. grew at an estimated rate of 5.3% to $3 trillion, or $9,523 per person, according to an analysis from the Office of the Actuary at the Centers for Medicare and Medicaid Services.
The previous five years saw historically low growth, which averaged 3.7%; in 2013 the average growth was 2.9%, according to a post by Lucy Larner on the HealthAffairsBlog. The analysis will appear in the January 2016 issue of the journal Health Affairs.
“Two main factors were responsible for health spending growth in 2014 — coverage expansion associated with the Affordable Care Act and faster growth in prescription drug spending,” lead author Anne B. Martin, an economist in the Office of the Actuary at CMS, said in the blog post. “However, it is unknown how these drivers of healthcare spending will affect trends over the next few years as the new health insurance landscape continues to evolve.”
About 8.7 million more people gained insurance coverage in 2014 compared with 2013, according to CMS. These additional people boosted the percentage of the population with insurance to 88.8% in 2014 from 86% in 2013. According to CMS, that’s the highest percentage since 1987.
The increase in those with coverage helped lower the out-of-pocket costs to consumers, according to Fortune magazine article “U.S. health care spending accelerates after historic lows,” by Laura Lorenzetti.
“Despite the overall spending pick up, growth in consumer out-of-pocket spending slowed down slightly to 1.3% from 2.4% the year before,” Lorenzetti wrote in the article.
“Millions of uninsured Americans gained healthcare coverage in 2014,” CMS Acting Administrator Andy Slavitt, said in a CMS release.“And still, the rate of growth remains below the level in most years prior to the coverage expansion, while out-of-pocket costs grew at the fifth lowest level on record.”
Additional highlights from the analysis include the following:
Total private health insurance expenditures (33% of total healthcare spending) reached $991 billion in 2014, and increased 4.4%, faster than the 1.6% growth in 2013 (the slowest rate since 1967). Per-enrollee spending increased by 3.2% in 2014. Average growth in per-enrollee spending was 7.4% from 2000-09.
Medicare spending, which represented 20% of national health spending in 2014, grew 5.5% to $618.7 billion, a faster increase than the 3% growth in 2013. The 2014 rate of growth was driven by increased spending growth for retail prescription drugs and in Medicare Advantage. Per-enrollee spending increased by 2.4%. Average growth in per-enrollee spending was 7% from 2000-09.
Medicaid accounted for 16% of total spending on health and grew 11% in 2014 to $495.8 billion, a faster increase than the 5.9% growth in 2013. Medicaid growth in 2014 was driven by coverage expansion under the ACA; an estimated 6.3 million newly eligible enrollees were added to Medicaid in 2014. Per-enrollee spending decreased by 2%.
Out-of-pocket spending (which includes copayments, deductibles, and spending not covered by insurance, excluding premiums) grew 1.3% in 2014 to $329.8 billion, slower than the annual growth of 2.1% in 2013. The slowdown in 2014 was influenced by the expansion of insurance coverage and the corresponding drop in the number of people without insurance.
Retail prescription drug spending accelerated in 2014, growing 12.2% to $297.7 billion, compared with 2.4% growth in 2013. The growth was prompted by increased spending for new medicines, a smaller effect from patent expirations and price increases for brand-name drugs. Private health insurance, Medicare and Medicaid spending growth for prescription drugs all accelerated in 2014.
Physician and clinical services spending increased from a growth rate of 2.5% in 2013 to 4.6% in 2014, while total spending climbed to $603.7 billion. Spending for Medicaid physician and clinical services — which increased 22.8% in 2014, compared with 11% in 2013 — was influenced by expanded Medicaid enrollment under the ACA and increased primary care provider fees. Faster private health insurance spending also contributed to the acceleration, increasing 1.2% in 2014 after a decline of 0.1% in 2013.
Hospital spending expenditures reached $971.8 billion in 2014, an increase of 4.1%, which was higher than the growth of 3.5% for the previous year.