Fed study: U.S. health spending slowed in 2016

U.S. health spending rose to $3.3 trillion in 2016, but the pace slowed compared to the previous two years as demand for drugs, hospital care and physician services weakened, according to a federal study released Wednesday (Source: “Pace Of U.S. Health Spending Slows In 2016,” Kaiser Health News, Dec. 6, 2017)

The analysis from the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS) showed a shift from the dramatic escalation in health spending that accompanied the coverage gains in 2014 and 2015 as millions of Americans found insurance under the Affordable Care Act.

The rate at which spending grew last year was lower across many measures — including figures for Medicare, Medicaid, private insurance, prescription drugs and hospitals — than in the previous two years.

Health spending was up 4.3 percent in 2016. In 2014 and 2015, spending increased 5.1 percent and 5.8 percent, respectively, as the ACA provided subsidies to help people get private coverage and most states expanded Medicaid. In effect, national health spending has returned to the moderate growth levels that followed the 2007-2009 recession.

Still, health spending continues to outpace overall spending on goods and services, which increased 2.8 percent in 2016.