U.S. healthcare spending grew 3.9% in 2017 — the second consecutive year the growth rate has slowed, an outcome driven largely by the drop-off in spending for hospital care, physician and clinical services and retail prescription drugs.
Healthcare spending reached $3.5 trillion in 2017, or about $10,739 per person, according to a new analysis from the Office of the Actuary at the Centers for Medicare and Medicaid Services, published online Dec. 6 in the public policy journal Health Affairs.
As a share of gross domestic product, health spending was 17.92%, similar to 2016's 17.97%, the analysis showed.
It was the first year since 2013 that healthcare's share of GDP did not increase, according to CMS analysts.
Officials noted that the low rate of spending growth in 2017 was similar to the average annual rate of 3.9% in 2008-2013 — the period that followed the financial crisis and predated the major coverage expansions under the Affordable Care Act — when there was a net decline in private health insurance enrollment, a low rate of growth in per person spending for private and government coverage and a slowdown in medical price inflation and in the use and intensity of goods and services.
In 2017, the CMS actuaries reported that U.S. healthcare spending had grown by 4.3% in 2016, but the analysts have since revised that figure to 4.8%, Anne Martin, an economist in CMS' National Health Statistics Group and the lead author of the new analysis, said during a Dec. 6 call with reporters.
The recent slowdown in health spending trends follows elevated rates of growth in 2014 and 2015 of 5.2% and 5.8%, respectively. The growth resulted from expanded insurance coverage and the associated increases in the use of services for people who gained coverage under the ACA, including through the expansion of Medicaid, and also by spending for prescription medicines, which grew rapidly during those two years in large part because of new hepatitis C drugs such as Gilead Sciences Inc.'s Harvoni and Sovaldi.
Spending on retail prescription medicines in 2014 had grown by 12.4 % — after Sovaldi and Harvoni hit the U.S. market — and 8.9% in 2015.
But in 2017, that growth had fallen sharply, dropping to 0.4 % — the slowest rate since 2012, when a large number of blockbuster drugs lost patent protection, which in turn, drove prices and total spending down.
Many people who took the newer hepatitis C drugs also were cured of their disease, so spending started to significantly decline for those medicines after 2015, Martin said.
The $333.4 billion spent on prescription medicines in 2017 accounted for 10% of total national health spending, according to the CMS report.
In 2017, there were fewer prescription drugs dispensed, Martin said.
The CMS analysts estimated that the use of prescription therapies increased by only 1.8% in 2017, versus a growth rate of 2.3% in 2016.
Americans also continued to use lower-cost generic medicines over higher-cost therapies, Martin said.
In 2017, lower-cost generic medicines represented 85% of the total drugs dispensed, versus 84% in 2014, according to CMS.
CMS relied on drug data from IQVIA Holdings Inc. to determine the drivers of growth and spending, though the agency's analysts did not break down the spending by type of drugs, Martin said.
The top therapeutic classes in 2017 by spending were diabetes, oncology, autoimmune, respiratory agents and HIV antivirals, she said.
Impact of opioid crisis
Another factor that affected the slower growth rate in prescription drug spending in 2017 was the U.S. opioid crisis, Martin said.
"The number of prescriptions dispensed for pain had a large impact on the trend and a lot of that did have to do with the opioid epidemic and greater tightening of those types of prescriptions being dispensed," she told reporters.
The House and Senate passed legislation earlier this year aimed at defeating the growing opioid addiction epidemic, which has resulted in the deaths of about 115 Americans per day.
The new legislation gives the U.S. Food and Drug Administration the authority to require drugmakers to package their opioids in unit-dose blister packs, for three- or seven-day supplies — an action intended to cut down on the number of prescriptions dispensed and the pills Americans take.
FDA Commissioner Scott Gottlieb said he wanted to get to work right away on implementing that requirement, noting that he would like to see initial opioid prescriptions for one- or two-day supplies.
Healthcare coverage and services
The CMS analysis also showed that total spending on Medicare, the government's insurance program for seniors and the disabled, grew at about the same rate in 2017 as it did in 2014 — 4.2% and 4.3%, respectively.
The $705.9 billion spent by Medicare in 2017 accounted for 20% of all national healthcare spending in the year, the agency stated.
Medicaid spending reached $581.9 billion in 2017, accounting for 17% of total national health expenditures. The growth rate for Medicaid, however, slowed for the third straight year — increasing 2.9% in 2017, versus 4.2% in 2016.
The slower growth in 2017 was influenced by a deceleration in enrollment in the program, from 3% in 2016 to 2% in 2017, CMS reported.
In addition, hospital care spending, which reached $1.1 trillion in 2017, also slowed, falling to 4.6% from 5.6% a year earlier.
CMS also reported that the growth rate for spending on physician and clinical services fell from 5.6% in 2016 to 4.2% in 2017, with total expenditures reaching $694.3 billion last year.