National Health Spending at $3.5 Trillion, $5+ Trillion in Less Than a Decade
Written by Editor   
Thursday, February 15, 2018 09:07 AM

National health spending grew by an estimated 4.6% in 2017, to $3.5 trillion, up slightly from a 4.3% increase in the growth rate in 2016, officials from the Centers for Medicare & Medicaid Services (CMS) said Wednesday.

The projected increase was due in part to increased growth in Medicare spending and higher premiums for health insurance bought through the Affordable Care Act's marketplaces, officials said. Over the longer term, national health spending is expected to increase 5.5% annually over the next decade -- 1% faster than the increase in the gross domestic product during that period -- reaching a total of $5.7 trillion by 2026.

Spending on physician and clinical services grew by an estimated 5% in 2017, to $698.3 billion, a decline from 5.4% in 2016, said an economist at CMS's National Health Statistics Group. The proliferation of high-deductible health plans, which encourage less spending on healthcare, will have contributed to that deceleration.

Prices for physician and clinical services grew moderately in 2017, at 2.4%, but are expected to increase slightly faster in 2018, at a rate of 2.8%, Cuckler said.  Healthcare's share of the gross domestic product is expected to rise from 17.9% in 2016 to 19.7% by 2026.  By that year federal, state, and local governments are projected to sponsor 47% of national health spending, up slightly from 45% in 2016, she said. And Medicare growth is expected to increase in the 2021-2026 period in terms of payments to physicians and clinics, "in part related to incentive payments for MACRA [Medicare Access and CHIP Reauthorization Act] legislation." 

The insured share of the population is expected to decline slightly over time, from 91.1% in 2016 to 89.3% by 2026, in part because the ACA's individual mandate -- requiring people to purchase health insurance or pay a penalty -- was eliminated in the tax reform bill passed in December.

Spending on prescription drugs is expected to increase an average of 6.3% annually from 2017 to 2026. Growth in prescription drug spending is expected to take a bit of a jump soon, from an estimated 2.9% increase in 2017 to a 6.6% increase in 2018. We are also expecting a small increase in the use of drugs in 2018, said one report.