The growth in health spending was mainly due to increased utilisation of services because health coverage was significantly expanded, as well as increased spending in retail prescription drugs.
Implications | US national health expenditure (NHE) grew by 5.8% year on year (y/y) in 2015 to reach USD3.2 trillion. Per capita, expenditure increased 5.0% y/y to USD9,990, according to the latest study by the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS). |
Outlook | The Affordable Care Act (ACA) is one of the main driving forces behind increased healthcare spending in 2014 and 2015 as an estimated 20 million individuals gained access to health insurance through Marketplace plans or Medicaid – the fate of the law now lies in the hands of the president-elect Donald Trump's administration that is anticipated to repeal and replace it in the near future. |
US national health expenditure (NHE) grew by 5.8% year on year (y/y) in 2015 to reach USD3.2 trillion. Per capita, expenditure increased 5.0% y/y to USD9,990, according to the latest study by the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS). The growth in healthcare expenditure exceeded economic growth by 2.1 percentage points in 2015, thus the share of gross domestic product (GDP) spent on healthcare was 17.8%, up from 17.4% in the previous year.
The growth in NHE was mainly due to increased utilisation of services because health coverage was significantly expanded, as well as increased spending in retail prescription drugs. During 2014 and 2015, nearly 9.7 million individuals gained access to private health insurance and 10.3 million were enrolled in Medicaid programmes – increasing the percentage of the population with health insurance from 86.0% in 2013 to 90.9% in 2015.
Private sector
Private health insurance expenditure increased by 7.2% y/y in 2015 to USD1.1 trillion, representing 33% of NHE. Growth was driven by increased enrolment and coverage expansion under the Affordable Care Act (ACA), as well as a significant rise in enrolment in employer-sponsored plans. Per enrolee, private health insurance spending increased by 4.5% y/y, below the average between 2000 and 2009 (7.4% y/y).
Out-of-pocket (OOP) expenditure, which includes co-payments, deductibles, and other spending not covered by insurance, except premiums, increased by 2.6% y/y in 2015 to USD338.1 billion, much slower than the average between 2000 and 2009 (4.6% y/y). The share NHE dedicated to OOP dropped from 13% in 2007 to 11% in 2015.
Medicare and Medicaid
Medicare spending represented 20% of NHE in 2015, and grew by 4.5% y/y to USD646.2 billion, slightly below the previous year's figure "even as the leading edge of the baby boom generation joined Medicare". Per enrolee, Medicare spending increased by 1.7% y/y, much lower than the rate between 2000 and 2009 of 5.8% y/y (excluding the impact of Medicare Part D in 2006). Medicare prescription drug expenditure, however, realised double-digit growth, rising 11.0% y/y in 2015.
Medicaid expenditure increased 3.8% y/y to USD545.1 billion – representing 17% of NHE. Enrolment growth in the programme has slowed to 5.7% in 2015, down from 11.1% the year before as a result of programme expansion under the ACA.
Prescription drug spending
Overall prescription drug spending grew by 9.0% y/y in 2015 to USD324.6 billion (10% of NHE), slightly lower than the previous year (12.4% y/y) but significantly higher than 2013 (2.3% y/y). Growth in prescription drug spending continued to outpace NHE growth and was higher than any other services in 2015. This was primarily driven by increased expenditure on new medicines, including hepatitis C drugs, price increases for existing brand-name drugs, and increased spending on generics.
In 2015, 45 new drugs were approved in the United States, a record high for the last decade, which have significantly contributed to the increase in drug spending. Meanwhile, prices of existing brand-name drugs realised a double-digit increase for the fourth year in a row. Generic dispensing rate increased from 81.7% in 2014 to 83.0% in 2015; however, prices increased less than 1% in 2015, despite declines in price growth in previous years. Retail prescription drug utilisation increased by 1.2% in 2015, driven primarily by increased Medicaid enrolees.
Prescription drug spending by Medicare and Medicaid increased by 11.0% y/y and 13.6% y/y, respectively in 2015, while private health insurance spending growth slowed from 12.9% y/y in 2014 to 9.0% in 2015 y/y.
The full report can be found here.
Outlook and implications
Despite strong growth in healthcare expenditure over the past few years as the country stepped out of the Great Recession and expanded access under the ACA, per capita growth rates remain below the average between 2000 and 2010 for private insurance and Medicare. GDP growth in 2014 and 2015 averaged 4.0%, while health expenditure accelerated to an average annual rate of 5.5% over the past two years. Prior to that, between 2007 and 2013, GDP growth and NHE growth increased at similar rates. The ACA is one of the main driving forces behind increased healthcare spending in 2014 and 2015 as an estimated 20 million individuals gained access to health insurance through Marketplace plans or Medicaid.
CMS Acting Administrator, Andy Slavitt, issued a statement noting that, "Our significant progress in reducing the nation's uninsured rate, while providing strong protections for Americans if they get sick, would not be possible without the Affordable Care Act." He added that despite the expanded coverage, per capita growth "remains at historically modest levels". The fate of the ACA now lies in the hands of the president elect Donald Trump's administration, and his recently appointed cabinet selection for Health and Human Services, Tom Price, which is anticipated to repeal and replace the law in the near future (see United States: 29 November 2016: US president-elect Trump selects ACA-critic Tom Price to head HHS).