National Health Spending Growth Accelerates In 2014

The country saw a 5.3 percent growth rate in health expenditures in 2014, a jump from the average rate of growth in health care spending of 3.7 percent seen during the five years before, and even more so from the historic low 2.9 percent growth in 2013, according to an analysis by actuaries from the Centers for Medicare and Medicaid Services.

CMS asserted the root of these sizable savings results is the ACA, which mandates that health insurance companies spend a minimum of 80 percent of premium dollars on healthcare endeavors. The rate was also significantly higher than the 2.4 percent growth seen in 2013.

“It’s safe to say spending would have been higher if more states had expanded”, Micah Hartman, statistician in the National Health Statistics Group with the Office of the Actuary at CMS, said during an event Wednesday hosted by Health Affairs at the National Press Club. He noted that while the overall growth in spending had escalated, the increases in spending per-enrollee for both private insurance and Medicare were less than half of the rate of increase in the decade prior to the Affordable Care Act.

PPACA opponents have pointed to other recent studies that have shown increases in health spending as evidence that the law is fulfilling one of its stated goals of reining in the cost of health care.

Enrollment in Medicaid, the joint state-federal health insurance plan for low income people, grew by 7.7 million people – a 13 percent growth rate. Contributing factors include increased enrollment and faster growth in spending for retail prescription drugs, physician and clinical services, and hospital care.

But its spending per person actually fell by 2 percent. Out-of-pocket spending by consumers on co-payments, deductibles and coinsurance made up 11 percent of health spending.

It said state Medicaid programs nationwide spent $1.3 billion on the drugs in 2014. Spending per enrollee declined by 2.0 percent in 2014 because the newly eligible were generally adults and children, who are typically lower-cost individuals. The companies can’t spend more than 20% on administrative costs.

Hepatitis C drugs accounted for $11.3 billion in new spending – accounting for roughly a third of the drug spending increase.

Physician and clinical services (4.6 percent) spending increased from a growth rate of 2.5 percent in 2013 to 4.6 percent in 2014, while total spending climbed to $603.7 billion.

Hospital spending (4.1 percent) expenditures reached $971.8 billion in 2014, an increase of 4.1 percent, which was higher than the growth of 3.5 percent for the previous year.

Millions of dollars in free money coming back to people with health insurance.