CMS Report: Health Care Spending Reached $3.2 Trillion in 2015

Spending averaged nearly $10,000 per person

In 2015, U.S. health care spending increased 5.8% to reach $3.2 trillion, or $9,990 per person, according to a new report from the Centers for Medicare and Medicaid Services (CMS). The overall share of the U.S. economy devoted to health care spending was 17.8% in 2015, up from 17.4% in 2014.

The coverage expansion that began in 2014 as a result of the Patient Protection and Affordable Care Act continued to have an impact on the growth of health care spending in 2015, the report says. In addition, faster growth in total health care spending in 2015 was driven by stronger growth in spending for private health insurance, hospital care, physician and clinical services, and the continued strong growth in Medicaid and retail prescription drug spending.

Most of the health spending (32%) was for hospital care. Spending for hospital care increased 5.6% to $1.0 trillion in 2015 compared with 4.6% growth in 2014. The faster growth in 2015 was driven by continued growth in nonprice factors, such as the use and intensity of services, according to the report. However, hospital price growth was only 0.9% in 2015, which was the lowest rate of growth since 1998. Hospital services, from a payer perspective, experienced faster growth in Medicaid and private health insurance spending; however, this strong growth was slightly offset by slower growth in Medicare hospital spending.

Physician and clinical services were the second-greatest contributors to health care spending in 2015, accounting for 20% of spending. Spending on physician and clinical services increased 6.3% in 2015 to $634.9 billion. This was an increase in growth of 4.8% in 2014 and was the first time since 2005 that the growth rate exceeded 6.0%. As with hospitals, the faster growth in overall physician and clinical services spending was driven by continued growth in nonprice factors. Price growth for physician and clinical services, however, declined 1.1% in 2015, driven by the expiration of temporary increases in Medicaid payments to primary care physicians.

Retail prescription drug spending decelerated in 2015, increasing 9.0% to $324.6 billion. Although growth in 2015 was slower than the 12.4% growth in 2014, spending on prescription drugs outpaced all other services in 2015, the report notes. The strong spending growth for prescription drugs was attributed to the increased spending on new medications; price growth for existing brand-name drugs; increased spending on generics; and fewer expensive blockbuster drugs going off-patent.

In 2015, the federal government accounted for the largest share of health care spending (29%), followed by households (28%), private businesses (20%), and state and local governments (17%).

Federal government spending on health increased 8.9% in 2015 after growing by 11.0% in 2014, and outpaced all other sponsors of health care in both years. In 2015, the federal government was the largest sponsor of health care at 29%, up from 28% in 2014 and 26% in 2013. The main driver for the increased federal share of health care was the continued enrollment of newly eligible adults into Medicaid who were fully financed by the federal government.

Source: CMS; December 2, 2016.