News: Healthcare spending totaled $3.6 trillion in FY 2018

CDI Strategies - Volume 13, Issue 55

Healthcare spending in the U.S. grew by 4.6% in 2018, totaling $3.6 trillion, HealthLeaders Media reported. This information is according to data released Thursday by CMS’s Office of the Actuary. Healthcare, as a share of the overall economy, slipped to 17.7% of gross domestic product (GDP) in 2018, down slightly from 17.9% in 2017.

The statistics, published in Health Affairs, show that healthcare spending averaged $11,172 per person in 2018, while the total personal healthcare spending growth rate held steady at 4.1%.

National healthcare spending increased faster in 2018 than it did in 2017, but it equaled the rate seen in 2016, according to HealthLeaders Media. CMS attributed the recent increase to acceleration in health insurance costs, which grew by 4.3% in 2017 and 13.2% in 2018. Another contributing factor was the reinstatement of the health insurance tax after a one-year moratorium.

For the second consecutive year, the total number of uninsured people rose by 1 million.

Rising medical prices accounted for an uptick in per capita healthcare spending last year. Hospital spending—which accounted for 33% of overall healthcare spending in 2018—led the way among goods and services spending growth, at 4.5%.

Growth in expenditures slipped slightly to 4.5%, though hospital prices rose from 1.7% in 2017 to 2.4% in 2018. Additionally, growth in total inpatient days slid from 1.7% in 2017 to 0.7% in 2018. 

HealthLeaders Media reported that physician and clinical services spending slowed to 4.1% in 2018, down from 4.7% in 2017, while retail prescription drug spending rose from 1.4% in 2017 to 2.5% in 2018.

CMS released projections in February for average healthcare spending growth rates of 5.5% annually between 2018 to 2027, totaling nearly $6 trillion. The study projected an acceleration in hospital spending from 4.4% in 2018 to 5.1% in 2019, thanks to faster than expected growth in Medicare and Medicaid.  

The study also attributed the growth in overall healthcare spending to more baby boomers entering Medicare and a 2.5% increase in medical goods and services through 2027.

On the payer side, private health insurance spending totaled $1.2 trillion, growing by 5.8% in 2018 compared to 4.9% in 2017. Meanwhile, both Medicare and Medicaid spending increased by 6.4% and 3%, respectively. 

The federal government's healthcare spending rose by 5.6% in 2018, doubling the rate from 2017, as growth in Medicare and Medicaid expenditures increased significantly. 

The largest of portions of healthcare spending went to the federal government and households, each with 28%, private businesses at 20%, state and local governments at 17%, and "other private revenues" at 7%.

Editor’s note: This article was originally published in HealthLeaders Media. The original statistics were published in Health Affairs.

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