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National health spending picks up steam

December 3, 2015
by Pamela Tabar, Editor-in-Chief
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National healthcare spending seems to have woken up after five years of historically low growth, according to a new annual report from the Centers for Medicare & Medicaid Services Office of the Actuary, published this week in Health Affairs. In 2014, the spending grew by 5.3 percent, a marked jump over a growth rate of just 2.9 percent in 2013.

The main driving factor is the Affordable Care Act (ACA) and state Medicaid expansions—although enacted years earlier, many of the ACA-related programs didn’t go into effect until 2014. Greatly because of coverage expansions, the number of insured people also jumped by more than 2 percent in 2014.

Other influences of the growth in healthcare spending included a strong prescription drug expenditure rate, which was “fueled in part by new drug treatments for hepatitis C,” notes the Health Affairs report announcement. Among major payers, Medicaid expenditures surged in growth to 11 percent over 2013, while Medicare experienced a 5.5 percent growth (3 percent in 2013) and private health insurers saw a 4.4 percent growth (1.6 percent in 2013).

Acceleration in healthcare spending is often a reflection of a healing financial market, but payment models need to keep pace with changing demands and financial challenges, explains Michael E. Chernew, PhD, Professor of Health Care Policy and director of the Healthcare Markets and Regulation Lab at Harvard Medical School. “Our ability to develop new payment models and/or benefit designs that balance the fiscal pressures associated with new medical technologies with economic constraints in a manner generally accepted by most stakeholders will be crucial not only to the viability of the health care system, but also to the fiscal health of the nation,” he writes in a Health Affairs blog on the new data.

Access the CMS 2014 national health spending report here.