Health Care Spending Grows 1.5% Faster Than Overall Economy in 2016

Out-of-pocket spending including copayments and deductibles increased by 3.9 percent

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Health care spending in the United States increased by 4.3 percent in 2016, which was 1.5 percentage points faster than the economy grew as a whole, according to data from the Centers for Medicare and Medicaid Services.

The data finds that while the growth of health care spending in 2016 slowed compared with the 5.8 percent growth seen in 2015, out-of-pocket spending accelerated during this time.

"During 2014 and 2015, the health spending share of the economy increased 0.5 percentage point from 17.2 percent in 2013 to 17.7 percent in 2015," the article states. "The increases in the health spending share of the economy in 2014 and 2015 were largely due to coverage expansion that contributed to 8.7 million individuals gaining private health insurance coverage and 10.2 million gaining Medicaid coverage over the period and to significant growth in retail prescription drug spending."

According to the data, while spending on private health insurance, Medicare, Medicaid and retail prescription drugs slowed in 2016, out-of-pocket spending accelerated.

Spending on Medicare increased by 3.6 percent in 2016 to $672.1 billion and spending on Medicaid increased by 3.9 percent to $565.5 billion. Federal spending on Medicaid increased by 4.4 percent, and state and local spending increased by 3.2 percent.

"The slower overall growth in Medicaid spending was much lower than in the previous two years, when Medicaid spending grew 11.5 percent in 2014 and 9.5 percent in 2015," the report states. "The higher growth in 2014 and 2015 was due in part to the initial impacts of the ACA's expansion of Medicaid enrollment during that period."

In addition, while private health insurance spending increased by 5.1 percent, it slowed from the previous year because of enrollment in Obamacare.

"The deceleration was largely driven by slower enrollment growth in 2016 after two years of faster enrollment growth due to ACA coverage expansion," the report explains.

Finally, out-of-pocket spending, which includes things like copayments, deductibles, and coverage not paid by insurance, not only increased by 3.9 percent in 2016 but grew faster than the 2.8 percent growth seen in 2015.

"Additionally, 2016 was the fastest rate of growth since 2007 and was higher than the average annual growth of 2.0 percent during 2008-15," the report says. "The faster growth in 2016 was due in part to a continued shift towards enrollment in high-deductible health plans, which was somewhat offset by a continued decrease in the number of uninsured in 2016."

Most of total health care spending came from the federal government, which comprised 28 percent, followed by private businesses, which comprised 20 percent.

Ali Meyer

Ali Meyer   Email Ali | Full Bio | RSS
Ali Meyer is a staff writer with the Washington Free Beacon covering economic issues that expose government waste, fraud, and abuse. Prior to the Free Beacon, she was a multimedia reporter with CNSNews.com where her work appeared on outlets such as Drudge Report and Fox News. She also interned with the Heritage Foundation and Pacific Research Institute. Her Twitter handle is @DJAliMeyer, and her email address is meyer@freebeacon.com.

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