National Health Care Spending In 2018: Growth Driven by ...

National Health Care Spending In 2018: Growth Driven by Accelerations in Medicare

and Private Insurance Spending

Office of the Actuary National Health Statistics Group

Micah Hartman, micah.hartman@cms. Anne Martin, anne.martin@cms.

Joseph Benson, joseph.benson@cms. Aaron Catlin, Deputy Director, aaron.catlin@cms.

and The National Health Expenditure Accounts Team

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Overview

National Health Expenditures reached $3.6 trillion, or $11,172 per

person in 2018.

National health spending increased 4.6 percent in 2018 following 4.2

percent growth in 2017.

The acceleration was largely due to faster growth in private health

insurance and Medicare due in part to the health insurance tax.

Faster growth in prices more than offset a slight slowdown in use and

intensity of services.

The share of Gross Domestic Product (GDP) devoted to health was

17.7 percent in 2018--less than the 17.9 percent share in 2017.

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Percent

Growth in National Health Expenditures and

Gross Domestic Product, 1987-2018

20.0 18.0 16.0 14.0 12.0 10.0

National health spending increased 4.6%; Share of GDP reached 17.7%

July 1990March 1991

Recession

March 2001November 2001

Recession

December 2007June 2009 Recession

NHE share of GDP: 17.7%

8.0

GDP: 5.4%

6.0

4.0

NHE: 4.6%

2.0

0.0

-2.0

2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987

Calendar Years

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group;

U.S. Department of Commerce, Bureau of Economic Analysis and National Bureau of Economic Research, Inc.

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Drivers of Growth

2016: 4.6% growth

Slower growth in enrollment (PHI, Medicaid) and spending (all three major payers) Slower growth in use and intensity of good and services Rapid slowdown in growth in retail prescription drug spending from a decline in spending for

hepatitis C drugs, fewer new drugs introduced, and slower growth in prices

2017: 4.2% growth

Slower growth in use and intensity of goods and services, particularly for hospital care, physician

and clinical services, and retail prescription drugs

Nearly all major sources of insurance and sponsors of health care experienced slower growth The moratorium on the health insurance tax also contributed to the slowdown

2018: 4.6% growth

Faster growth in net cost of administration, Medicare, private health insurance, and retail

prescription drugs

Faster growth in economywide prices and the collection of the health insurance tax

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. 4

Enrollment in Private Health Insurance, Medicaid, Medicare, and the Uninsured (Levels in Millions)

Private Health Insurance Employer Sponsored Direct Purchase Marketplace Medigap Other Direct Purchase

2014

194.7 169.8 26.2

5.5 10.6 10.1

2015

200.3 172.2 29.6

9.0 11.6 9.0

2016

201.8 173.1 30.1 10.0 12.1

8.0

2017

202.1 175.6 28.0

9.8 11.9 6.4

2018

200.5 175.2 26.7

9.9 11.8 5.0

Medicaid Medicare

65.6

69.3

71.1

72.1

72.8

52.8

54.3

55.8

57.2

58.7

Uninsured

35.5

29.5

28.7

Insured Share of Population 88.8%

90.8%

91.1%

Note: Enrollment estimates are not mutually exclusive and are therefore not additive.

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

29.7 90.8%

30.7 90.6%

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Annual Percent Change

Factors Accounting for Growth in

Per Capita National Health Expenditures,

Selected Calendar Years 2004-2018

Per capita health spending grew 4.0% in 2018

6.5% 6.0% 5.5% 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0%

5.7% 2004-2007

3.0% 2008-2013

Age and sex factors

4.5%

5.0%

3.8 %

3.5%

2014

2015

Residual use and intensity

2016

2017

Medical prices

4.0% 2018

NOTES: Medical price growth, which includes economywide and excess medical-specific price growth (or changes in medical-specific prices in excess of economywide inflation), is calculated using the chain-weighted national health expenditures (NHE) deflator for NHE. "Residual use and intensity" is calculated by removing the effects of population, age and sex factors, and price growth from the nominal expenditure level.

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

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The Nation's Health Dollar, Calendar Year 2018: Where It Went

Public health, 3%

Government administration and net cost of health insurance,

8%

Investment, 5%

Hospital care, 33%

Other services, 13%

Nursing care facilities and continuing care retirement communities,

5% Other health, residential,

and personal care, 5%

Retail Prescription drugs, 9%

Physician and clinical services, 20%

NOTE: "Other services" includes Dental services, Other professional services, Home health care, Durable medical equipment, and Other nondurable medical products.

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

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Annual Growth in National Health Expenditures, 2017 and 2018

2017 2018

National Health Expenditures

4.2 4.6

Personal Health Care

Government administration and net cost of health insurance

Public health activities

Investment

0.0

4.1 4.1

3.6

Health insurance tax impacts

12.0

3.0 2.4

7.4 3.6

2.0

4.0

6.0

8.0

10.0

12.0

14.0

Annual Percent Change

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

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