National Health Care Spending In 2016

Office of the ActuaryNational Health Statistics Group

1

Overview

National Health Expenditures reached $3.3 trillion, or $10,348 per person in 2016.

National health spending increased 4.3 percent in 2016 following 5.8 percent growth in 2015.

Slower spending growth for the major payers and services Enrollment growth slowed for Medicaid and private health insurance(PHI)

Slower growth in Medicaid (3.9 percent) and retail prescription drugs (1.3 percent).

The share of Gross Domestic Product (GDP) devoted to health was 17.9 percent in 2016—up from a 17.7 percent share in 2015.

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. 2

Growth in National Health Expenditures and Gross Domestic Product, 1987-2016

National health spending increased 4.3% in 2016

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-2.0

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GDP: 2.8

NHE: 4.3

July 1990-March 1991

Recession

March 2001-November 2001

Recession

Calendar Years

December 2007-June 2009Recession

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%

%

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.

National Health Expenditures as a Share of Gross Domestic Product, 1987-2016

The share of GDP devoted to health was 17.9% in 2016

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Calendar Years

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17.9%

March 2001-November 2001Recession

July 1990-March 1991Recession

December 2007 -June 2009Recession

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.

4

Drivers of Growth

2014 & 2015:

Faster enrollment and spending growth as a result of the ACA (PHI, Medicaid).

• Increased use and intensity of services

Rapid growth in retail prescription drug spending, particularly hepatitis C drugs.

2016:

Slower growth in enrollment (PHI, Medicaid) and spending (all three major payers).

• Slower growth in use and intensity of services

Rapid slowdown in growth in retail prescription drug spending from fewer new drugs and decline in hepatitis C spending.

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. 5

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

2013 2014 2015 2016

Private Health Insurance 187.6 192.8 196.3 196.4

Employer Sponsored 169.2 169.8 172.2 173.1

Individual 20.0 24.5 25.6 24.8

Medicaid

Marketplace 5.4 9.0 10.0

58.9 65.9 69.1 71.2

Medicaid Newly Eligible 6.6 9.6 11.4

Medicare 51.3 52.8 54.3 55.8

Uninsured 44.2 35.5 29.5 28.6

Insured Share of Population 86.0% 88.8% 90.8% 91.1%

NOTE: Enrollment estimates are not mutually exclusive. The estimate of Marketplace enrollment reflects average monthly enrollment and not enrollment at the end of the year.

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. 6

Factors Accounting for Growth in Per Capita National Health Expenditures, Selected Calendar Years 2004-2016

Per capita health spending grew 3.5% in 2016

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

2004-2007 2008-2013 2014 2015 2016

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Age and sex factors Medical prices Residual use and intensity

5.8%

3.0%

4.3%5.0%

3.5%

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. 7

The Nation’s Health Dollar, Calendar Year 2016: Where It Went

Hospital care, 32%

Physician and clinical services, 20%

Nursing care facilities and continuing care retirement

communities, 5%

Prescription drugs, 10%

Government administration and net

cost of health insurance, 8%

Other health, residential, and personal care, 5%

Other spending, 20%

NOTE: “Other spending” includes Dental services, Other professional services, Home health care, Durable medical equipment, Other nondurable medical products, Government public health activities, and Investment.

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.8

Annual Growth in Spending by Type of Good and Service, 2015-2016

5.8 5.75.9

8.9

3.7

8.7

4.4

5.95.8

4.6

4.14.3

4.75.4

1.3

2.9

5.3

4.6 4.7

4.04.4

4.9

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

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2015 2016

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. 9

Annual Growth in Hospital Spending,2012-2016

32%

6.0

3.9 4.3

5.7

4.7

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2012 2013 2014 2015 2016

2016 highlights:

• Total spending = $1.1 trillion

• Spending increased 4.7%

• Slower growth in 2016:

– Medicaid

– Private Health Insurance

– Residual use and intensity

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. 10

Annual Growth in Physician and Clinical Services Spending, 2012-2016

20%

4.0

2.2

4.6

5.9

5.4

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2012 2013 2014 2015 2016

2016 highlights:

• Total spending = $664.9 billion

• Spending increased 5.4%

• Slower growth in 2016:

– Medicaid

– Medicare

– Residual use and intensity

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.11

Annual Growth in Retail Prescription Drug Spending, 2012-2016

10%

0.2

2.3

12.4

8.9

1.3

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

2012 2013 2014 2015 2016

2016 highlights:

• Total spending = $328.6 billion

• Spending increased 1.3%

• Slower growth in 2016:

– Fewer new drugs approved

– Slower growth in brand name drugs• Decline in spending for hepatitis

C drugs

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. 12

The Nation’s Health Dollar, Calendar Year 2016: Where It Came From

Investment5%

Public health activity2%

Other third-party payers and programs

8%

Out of pocket11%

Health insurance

75%

Medicare

Medicaid

Private health insurance

VA, DOD, and CHIP

17%

20%

34%

4%

NOTES: “Other third-party payers and programs” includes Worksite health care, Other private revenues, Indian Health Service, Workers’ compensation, General assistance, Maternal and child health, Vocational rehabilitation, Substance Abuse and Mental Health Services Administration, School health, and Other federal and state local programs.

“Out of pocket” includes co-payments, deductibles, and any amounts not covered by health insurance. Note: Sum of pieces may not equal 100% due to rounding.

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. 13

Annual Growth in Spending by Source of Funds, 2015-2016

5.8

6.9

4.8

9.5

2.81.9

11.7

0.1

12.4

4.35.1

3.6 3.9 3.9

6.1

4.3

-0.2

13.7

-2.0

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2015 2016

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. 14

Private Health Insurance: Growth in Enrollment,

Total, and Per Enrollee Expenditures, 2012–2016

34%

2.7%

1.8%

0.0%

5.7%

6.9%

5.1%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

2012 2013 2014 2015 2016

Per Enrollee PHI Expenditure Growth

PHI Enrollment Growth

PHI Expenditure Growth

2016 highlights:

• Total Spending = $1.1 trillion

• Spending increased 5.1%

• Enrollment growth slowed

• Per enrollee increased 5.1%

-Slower growth in retail prescription drug spending

-Slower growth in hospital spending

-Faster growth in net cost

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. 15

Medicare: Growth in Enrollment, Total, and

Per Enrollee Expenditures, 2012–2016

20%

0.5%0.4%

1.7%

2.1%

0.8%

2.7% 2.8%

4.8%

3.6%

0%

1%

2%

3%

4%

5%

2012 2013 2014 2015 2016

Per Enrollee Medicare Expenditure Growth

Medicare Enrollment Growth

Medicare Expenditure Growth

2016 highlights:

• Total Spending = $672.1 billion

• Spending increased 3.6%

• Enrollment growth fairly stable

• Per enrollee increased 0.8%

-Slower growth in Prescription drug spending

-Slower growth in Physician and clinical services spending

-Slower growth in Nursing home spending

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. 16

Medicare: Growth in FFS and Medicare Advantage Enrollment, Total Spending, and Per Enrollee Spending, 2012 – 2016

20%

0.5%0.9%

2.4%

1.5%

0.2%

-2%

0%

2%

4%

6%

8%

10%

12%

2012 2013 2014 2015 2016

Fee-for-Service (67%)

Per FFS enrollee FFS Enrollment FFS Spending

0.4%

-1.0%

0.2%

3.3%

2.0%

-2%

0%

2%

4%

6%

8%

10%

12%

2012 2013 2014 2015 2016

Medicare Advantage (33%)

Per MA enrollee MA Enrollment MA Spending

11.1%

7.6%

5.2%

7.4%

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. 17

Medicaid: Growth in Enrollment, Total, and Per Enrollee

Expenditures, 2012–2016

17%

0.0% 4.0%

-0.3%

4.5% 0.9%

11.9%

4.9%

3.0%

11.5%

9.5%

3.9%

-2%

0%

2%

4%

6%

8%

10%

12%

2012 2013 2014 2015 2016

Per Enrollee Medicaid Expenditure Growth

Medicaid Enrollment Growth

Medicaid Expenditure Growth

2016 highlights:

• Total Spending = $565.5 billion

• Spending increased 3.9%

• Enrollment growth slowed

• Per enrollee increased 0.9%

-Slower growth in Hospital spending

-Slower growth in Other health, residential, and personal care spending

-Slower growth in Physician and clinical services spending

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. 18

Medicaid: Growth in Total, Federal, and State & Local Expenditures, 2012 – 2016

17%

3.9%

5.4%

11.5%

9.5%

3.9%

-1.6%

5.6%

18.8%

12.5%

4.4%

12.4%

5.0%

1.6%

4.9%

3.2%

2012 2013 2014 2015 2016

Total Federal State & local

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. 19

National Health Expenditures: Distribution and Growthby Type of Sponsor

20.1% 19.8% 19.9%

28.9% 28.0% 28.1%

7.2% 6.6% 6.7%

26.1% 28.4% 28.3%

17.6% 17.2% 16.9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2013 2015 2016

Distribution by Type of Sponsor Selected Years

State & localgovernment

Federalgovernment

Other privaterevenues

Households

Privatebusiness

Note: Sum of pieces may not equal 100% due to rounding.

0%

2%

4%

6%

8%

10%

12%

2012 2013 2014 2015 2016

Annual Growth by Type of Sponsor

NHE State & local government

Federal government Private business

Households

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.20

2016 National Health Expenditure Accounts:Summary

National health spending increased 4.3 percent in 2016

following 5.8 percent growth in 2015.

Slower growth in 2016 followed faster growth in 2014 and

2015 that was associated with ACA coverage expansions and

strong retail prescription drug spending growth.

The slowdown was broadly based as all major payers and

goods and services slowed in 2016.

National Health Expenditures represented a 17.9 percent

share of Gross Domestic Product (GDP) in 2016.

The federal government and households paid for the largest

shares of health care in 2016—at 28 percent each.

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.21