The United States spent $2.9 trillion on health care in 2013, or about $9,255 per person, according to a new detailed accounting of the nation's health care dollars. The 2013 totals represent just 3.6 percent growth in national health spending from 2012 — the lowest annual growth rate since 1960, according to a federal report published in the policy journal Health Affairs.
It also marks the fifth straight year of low health spending growth, and it shows a slowdown from the 4.1 percent growth rate in 2012. And for the fifth straight year, health care spending as a share of the economy held steady at 17.4 percent.
The annual spending report from the CMS Office of the Actuary provides the most comprehensive look at where the nation's health care dollars go. Most of the $2.9 trillion is spent on hospital care ($936.9 billion), physicians and clinical services ($586.7 billion), and prescription drugs ($271.1 billion). Here's how that spending breaks down:
That spending changes from year-to-year though. As the following chart shows, most health-care services saw a lower rate in spending growth in 2013 compared to 2012.
Prescription drug spending, which accounts for almost one in every 10 dollars spent on health care, saw modest spending growth after being pretty flat in 2012. That's on the account of a number of blockbuster drugs getting generic competition in 2012, while there were more new drug launches in 2013 than any of the past 10 years.
The ongoing question — the one that matters for consumers and for state and federal budgets — is what's behind the slowdown in health spending growth in recent years. Is it a function of the slow recovery, or is the health-care system getting more efficient?
Officials from the CMS actuary's office says they're not surprised by the recent slowdown in health spending growth, since it usually tracks with GDP growth coming out of a recession. They point to the following chart, which tracks the growth in national health expenditures (NHE) against GDP growth:
At the same time, the actuary report cites a number of factors contributing to the slowdown that don't seem to apply to the experience of previous recoveries. There's been significant recent growth in high-deductible health plans, which come with lower premiums and higher out-of-pocket costs, which could mean people use less heath care. The report also cites cuts to Medicare spending, through last year's budget sequester and the 2010 Affordable Care Act, as well as greater Medicaid drug rebates and limits on insurer profits.
And though private insurance enrollment grew 0.7 percent in 2013 — the third straight year of growth — the private insurance rolls in 2013 were still below pre-recession levels. That could change in 2014, the first year of the ACA's coverage expansion.
The actuary report also points out new pressures driving up health spending, such as the ACA's Medicaid expansion, the closing of Medicare's prescription drug doughnut hole and new fees on drugmakers.
So what happens to health-care spending when the recovery gets stronger? The CMS actuary's most recent projections predict that health spending will almost double to $5.2 trillion in 2023, when it will account for 19.3 percent of the economy. Those projections come from September and are based on 2012 data, so they'll undergo revisions next year and in future years.
All these shifting pieces are still playing out in the health-care system, and Wednesday's report concludes with this over-arching theme: "The balance of these and many other factors over the next few years will determine how historically low health spending growth from 2009-2013 is viewed: as the temporary aftermath of the great recession or the beginning of a new era."