Our Take: Health care spending up in 2018 but not as much as the GDP
If you want to delve into the minutiae to see exactly where spending increased or decreased, Health Affairs published the CMS study online (subscription required) along with a helpful synopsis in a blog post.
- Net health insurance costs grew by 13.2% in 2018, up from growth of 4.3% in 2017. As Micah Hartman indicated, the main driver was the reinstatement of the Affordable Care Act’s health insurance tax. Congress suspended the tax in 2017, reinstated it in 2018 (resulting in the collection of $14.3 billion), and then suspended it again in 2019. What happens in 2020 remains to be seen.
- Spending for private insurance increased by 5.8% to $1.2 trillion (34% of total NHE), for Medicare by 6.4% to $750.2 billion (21% of NHE), and for Medicaid by 3% to $597.4 billion (16% of NHE).
- Spending on retail prescription drugs increased by 2.5% to $335 billion (9% of NHE). Of note, retail drug prices dropped last year (by 1%) for the first time since 1973, largely because of greater use of generics.
- Employer spending on health care grew 6.2% in 2018 — the largest increase since 2003 — even though the number of covered employees decreased slightly. Growth in employee contributions to employer-sponsored insurance was 3.4%, down from growth of 6.8% in 2017.
- Per capita spending for those with private health insurance, not including out-of-pocket expenses, increased by 6.7% to $6,199, the highest increase since 2004.
- Compared with 2017, price increases for hospital care and physician and clinical services accounted for more of the increased growth in spending in both categories, but lower use and intensity of services helped to offset the overall increase in spending in these categories.
The House passed legislation Thursday that would lower prescription drug prices by allowing CMS to negotiate prices with drugmakers for up to 250 commonly prescribed drugs, including insulin. The Elijah E. Cummings Lower Drug Costs Now Act would make substantial changes to Medicare, including new vision, dental, and hearing benefits. It would also place a $2,000 cap on out-of-pocket drug costs for Medicare beneficiaries. The bill is not likely to pass in the Senate. House Republicans proposed their own bill, which also would cap out-of-pocket expenses and would require insurers to provide patients with drug pricing information before physicians write prescriptions, but it would not give Medicare the power to negotiate prices.