U.S. Health Care Spending Increased by 5.3% in 2014, Report Finds

Total U.S. health care spending in 2014 grew to $3 trillion, driven by coverage gains resulting from the Affordable Care Act and rising prescription drug prices, according to a CMS analysis published Wednesday in Health Affairs, the Washington Post's "Wonkblog" reports (Johnson, "Wonkblog," Washington Post, 12/2).

According to the analysis, health care expenditures increased by 5.3% last year, marking the fastest growth rate since President Obama took office (Alonso-Zaldivar, AP/Sacramento Bee, 12/2). In comparison, health care spending grew by 2.9% in 2013, which was the lowest recorded growth in such spending since the federal government started tracking it 55 years ago (Armour, Wall Street Journal, 12/2).

Growth in U.S. health care spending also outpaced growth in the overall U.S. economy, reaching 17.5% of the country's gross domestic product, the analysis found (AP/Sacramento Bee, 12/2). Health care spending represented 17.3% of the country's GDP in 2013 (Herman, Modern Healthcare, 12/2).

Spending Growth Drivers

According to the report, "The return to faster growth and an increased share of GDP in 2014 was largely influenced by the coverage expansions of the [ACA]" (AP/Sacramento Bee, 12/2).

The report noted that 88.8% of U.S. residents in 2014 were insured through:

• Medicaid;
• Medicare; or
• Private health plans (Terhune, Los Angeles Times, 12/2).

According to the report:

• 7.7 million U.S. residents enrolled in Medicaid in 2014; and
• 2.2 million acquired private health coverage ("Wonkblog," Washington Post, 12/2).

The U.S. spent on average $9,523 per insured individual (Los Angeles Times, 12/2). The report noted that U.S. spending in 2014 on:

• Medicaid increased by 11% (Ferris, The Hill, 12/2);
• Medicare increased by 5.5% (AP/Sacramento Bee, 12/2); and
• Private insurance increased by 4.4%.

Meanwhile, the report showed that consumers' out-of-pocket spending, which included health plan deductibles and premiums, increased by 1.3% in 2014, compared with a 2.4% increase in 2013 (The Hill, 12/2).

The report attributed overall health care spending growth to a rise in prescription drug prices ("Wonkblog," Washington Post, 12/2). U.S. spending on prescription drugs grew by more than 12.2% in 2014, compared with 2.4% in 2013 (Wall Street Journal, 12/2). Overall spending on such drugs grew to $297.7 billion in 2014, marking the largest annual increase in such spending in more than 10 years. According to "Wonkblog," prescription drug spending accounted for 10% of the country's overall health care-related expenditures.

An official from CMS' Office of the Actuary said prescription drug spending increased in part because of new, costly hepatitis C treatments. Spending on such drugs accounted for $11.3 billion in new spending, or about one-third of total prescription drug spending in 2014.

Comments

Richard Frank, assistant secretary for planning and evaluation at HHS, said the jump in health care spending is likely a temporary increase. He noted, "Today's numbers on national health spending show that as millions more Americans gained coverage in 2014, health care spending growth stayed well below the trend seen prior to the" ACA ("Wonkblog," Washington Post, 12/2).

Separately, acting CMS Administrator Andy Slavitt said the ACA is helping to control health care costs. "Millions of uninsured Americans gained health care coverage in 2014," Slavitt said, adding, "And still, the rate of growth remains below the level in most years prior to the coverage expansion, while out-of-pocket costs grew at the fifth lowest level on record" (The Hill, 12/2).