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The Amount Americans Spend On Healthcare Is Still Growing, But More And More Slowly

(Source: forbes.com)

Prices are going up, but Americans seem to be using fewer healthcare products and services.

Prices are going up, but Americans seem to be using fewer healthcare products and services. Getty

The amount of money spent on healthcare in America is still growing, but at a slower rate than recent years, according to the U.S. government’s annual account.

Americans spent $3.5 trillion on healthcare in 2017, adding up to 17.9% of GDP, nearly the same as 2016’s 18% share. Healthcare spending grew by 3.9%, the slowest it’s grown since 2013 and slower than the previous year’s 4.8%.

The main reason overall healthcare spending grew more slowly was because of less growth in the amount of healthcare services people used and in the use of fancier services like MRI instead of CT scans. This is one category called “use and intensity” and is what’s left over after the report authors at the Centers for Medicare and Medicaid Services subtract out spending growth that is attributable to U.S. population demographic changes and healthcare prices going up.

Healthcare prices grew by 1.6% per capita in 2017, compared with 1.3% in 2016. Lots of healthcare economics research points to high prices as the key driver of the huge amount Americans spend on healthcare. “We have known for many years that’s it’s prices that are responsible for our high level of spending,” Gerard Anderson of the Bloomberg School of Public Health at Johns Hopkins has previously told me.

Spending on retail prescription drugs was $333.4 billion, up 0.4%, which is the slowest growth rate since 2012. The reason for that is that more people are taking generic drugs, fewer people are starting to take pricey hepatitis C drugs (they’ve been cured), price increases for existing brand-name drugs were lower, and the number of prescriptions dispensed overall grew more slowly. “A lot of that did have to do with the opioid epidemic and greater tightening of those types of prescriptions being dispensed,” said Anne Martin, the report’s author and an economist in the Centers for Medicare and Medicaid Services Office of the Actuary, on a conference call with reporters.

Out of pocket spending—for deductibles, copayments, and other expenses not covered by insurance—also grew more slowly, up 2.6% to $365.5 billion, primarily because spending on nursing home and continuing-care retirement communities and doctor and dental services grew more slowly than in 2016.

One of the only areas of accelerating spending was in private Medicare plans, which grew 10%, compared with growth of 8.1% in 2016, and offset slower growth in traditional Medicare spending of 1.4%. Medicare spent $705.9 billion on healthcare in 2017, one third of which was from private Medicare plans.

Other top-line stats:

  • $1.1 trillion was spent on hospital care (33% of total 2017 spending, up 4.6%)
  • $694.3 billion was spent on doctor and clinical services (20% of total 2017 spending, up 4.2%)
  • The $333.4 billion spent on retail prescription drugs was 10% of total 2017 spending

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More Info: forbes.com

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