National Health Spending Growth Remains Low for 4th Straight Year

Slower growth in prescription drug, nursing home, private health insurance, and Medicare expenditures contributed to low overall healthcare costs for the fourth consecutive year, according to the CMS’s office of the Actuary.

The report 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.

National health expenditures grew at an annual rate of 3.7 percent in 2012, marking the fourth consecutive year of low growth, the CMS reported. Health spending as a share of gross domestic product fell slightly from 17.3 percent in 2011 to 17.2 percent in 2012.

Key findings from the report include the following:

  • 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.
  • 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.
  • 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.
  • 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 (SNF).
  • 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.

Source: CMS (NIH), January 6, 2014

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