Growth in health spending slows

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"Because the unique factors that influenced the health sector over the past decade did not have as great an effect in 2016, this may be an initial indication that this year marks a return to the more typical relationship between annual rates of growth in healthcare spending and growth in nominal GDP", the paper states.

Authors of the CMS report said spending growth slowed past year for all three major categories of medical goods and services - hospitals, physician/clinical services and retail prescription drugs - for the first time since 2010.

During 2015, USA health care spending was 17.7% of gross domestic product.

Previously, the health spending share of the economy increased 0.5 percentage point from 17.2% in 2013 to 17.7% in 2015. Retail prescription drugs Retail prescription drug spending increased just 1.3% a year ago, following much stronger growth rates in 2014 (12.4%) and 2015 (8.9%).

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During a call explaining the results, Micah Hartman, a statistician with CMS and an author of the report, said there was more spending and faster growth in 2014 and 2015 as more people gained health insurance coverage through the Affordable Care Act (ACA) and through expanded coverage through the Medicaid program.

According to the CMS, the main reason for the slow down was the decreasing demand for physician services, prescription drugs, and hospital care by the American public.

One exception to the slowdown in 2016 was spending on out-of-pocket health charges - including, copayments and deductibles, and spending not covered by insurance - which grew at their fastest rates since 2007.

The 8.2% spending growth for clinical services almost doubled the 4.6% growth in spending for physician services for the twelfth consecutive year.

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Spending on private health insurance rose 5.1 percent to $1.1 trillion, which was slower than the 6.9 percent growth in 2015.

The cost of health as a share of the economy increased 0.2 points to 17.9 percent from 17.7 percent in 2015. Last year, on a per enrollee basis, Medicaid spending increased 0.9%, down from 4.5% in 2015, which reflects increased efforts by states to control costs, a decline in supplemental payments to hospitals, and a decrease in per enrollee costs for newly eligible adults. The deceleration was largely driven by slower enrollment growth in 2016 after two years of faster enrollment growth due to ACA coverage expansion.

Spending on home health services also contracted in 2016, with the 4.0% gain to $92.4 billion falling short of the 5.8% growth seen in 2015.

Spending on retail prescription drugs grew by only 1.3 percent, to $328.6 billion, in 2016. CMS attributed the previous large increases to the introduction of new drugs and higher prices for existing drugs, particularly those used to help treat hepatitis C. On a per capita basis, national health spending grew at 3.5%, reaching $10,348 previous year.

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