Healthcare

U.S. health spending grew 5.3% last year, fueled by prescription drug costs and an expansion of insurance coverage, federal officials said Wednesday. (Fotolia / TNS)

Chad Terhune
December 2, 2015

U.S. healthcare spending grew 5.3% last year to $3 trillion, another sign that a historic slowdown in medical inflation may be ending, a new federal report shows.

The massive expansion of insurance coverage under the health law and rapid growth in specialty drug spending fueled the uptick in medical costs, officials said. Annual spending growth was 3.7%, on average, during the last five years.

The country spent $9,523 per person on healthcare in 2014, including Medicare, Medicaid and private health insurance. That’s far higher than what other developed countries pay, and healthcare spending now accounts for 17.5% of the U.S. economy.

Experts aren’t predicting a return to double-digit increases in medical spending. But the latest trend underscores how difficult it will be for policymakers, employers and insurers to control healthcare costs going forward.

The upswing could further squeeze American workers. Health insurance premiums and deductibles keep taking a bigger bite of their paychecks, as employers shift more healthcare costs to employees.

“Two main factors were responsible for health spending growth in 2014 — coverage expansion associated with the Affordable Care Act and faster growth in prescription drug spending,” said Anne B. Martin, an economist at the Centers for Medicare and Medicaid Services.

“It is unknown how these drivers of healthcare spending will affect trends over the next few years as the new health insurance landscape continues to evolve,” Martin added.

Wednesday’s report by government actuaries found that the percentage of Americans with health insurance reached 88.8% in 2014, the highest share since 1987.

That came from more people buying private health insurance with the help of federal premium subsidies, and more individuals enrolling in Medicaid programs that were expanded in more than 25 states. Total Medicaid enrollment increased by 7.7 million in 2014.

Prescription drug spending soared 12.2% last year to $297.7 billion. That was up sharply from a 2.4% increase in 2013.

To read expanded article, click here.