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National Health Spending Grows Faster in 2015  As Coverage Expands and Utilization Increases

Share of Gross Domestic Product Increases to 17.8 Percent, up from 17.4 Percent in 2014

Bethesda, MD—A new analysis from the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS), published as a Web First by Health Affairs, estimates that in 2015 health care spending in the United States grew at a rate of 5.8 percent and reached $3.2 trillion, or $9,990 per person. In 2014 spending increased 5.3 percent, which followed five consecutive years of historically low growth from 2009 to 2013. Faster growth in 2014 and 2015 occurred as Affordable Care Act (ACA) provisions expanded coverage for individuals through Marketplace plans and the Medicaid program.

This study will also appear in the January 2017 issue of Health Affairs. The link to the complete study, once the embargo lifts, will be:

Health spending’s share of the nation’s gross domestic product (GDP) was 17.8 percent in 2015, up from 17.4 percent in 2014. Coverage expansions that began in 2014 as a result of the ACA helped increase the percentage of the population with health insurance from 86.0 percent in 2013 to 90.9 percent in 2015. This expansion of coverage continued to affect health spending growth in 2015.

Faster growth in total health care spending was primarily due to accelerated growth in spending for private health insurance (7.2 percent), hospital care (5.6 percent) and physician and clinical services (6.3 percent). While Medicaid spending and retail prescription drug spending grew at a slower rate than in 2014, continued strong growth in both contributed to overall health care spending growth in 2015.

On a per capita basis, national health spending grew at 5.0 percent, reaching $9,990 in 2015. Changes in the age and sex mix of the population accounted for 0.6 percent of the growth in per capita health spending. Increases in medical prices and residual use and intensity of health care goods and services accounted for 1.2 percent and 3.2 percent of the growth, respectively.

“Over the last fifty-five years, the largest increases in health spending’s share of the US economy have typically occurred around periods of economic recession,” said Anne B. Martin, an economist in the CMS Office of the Actuary and first author of the Health Affairs article. “While the 2014 and 2015 increases occurred more than five years after the nation’s last recession ended, they coincided with 9.7 million individuals gaining private health insurance coverage and 10.3 million more people enrolling in Medicaid coverage. An additional contributing factor is the rapid growth in retail prescription drug spending.”

While 2014–15 is unique given the significant changes in health coverage that have taken place, health spending is projected to increase as a share of the overall economy in the decade ahead. It will be influenced by the aging of the population, changing economic conditions, and faster medical price growth.

Major payers’ spending growth included:

  • Private health insurance (7.2 percent) spending increased 7.2 percent, reaching $1.1 trillion. Private health insurance continued to be the largest payer of health care in the United States. It accounted for one-third of total health care spending in 2015 as it did in 2014, when spending increased at 5.8 percent. In 2015 there was a notable increase of 1.4 percent in enrollment of individuals in employer-sponsored health plans as the labor market continued to improve. Private health insurance benefit payments increased 7.9 percent in 2015—compared to growth of 5.5 percent in 2014—and reached $944.7 billion. On a per enrollee basis, private health insurance benefits increased 5.2 percent in 2015, faster than the growth of 3.0 percent in 2014. The strong 2015 growth was largely due to accelerated growth in hospital and physician and clinical services spending, which increased 9.1 percent and 6.5 percent, respectively. This is due, in part, to increased enrollment; increased per enrollee spending; and the fact that some of the newly insured individuals were sicker, used more services, and had higher medical costs, compared to those who were previously insured.

  • Medicare spending (4.5 percent) reached $646.2 billion, accounting for 20 percent of total health expenditures. Spending for the program grew at 4.5 percent in 2015—slightly slower than the 4.8 percent growth in 2014. The slower growth rate is attributed to trends in enrollment. Overall, Medicare enrollment reached 54.3 million beneficiaries in 2015—with enrollment increasing 2.7 percent, slower than the growth of 3.1 percent in 2014. Spending growth per Medicare enrollee remained relatively steady in 2015—1.7 percent, compared to 1.6 percent in 2014. While Medicare hospital and prescription drug spending growth slowed, spending on nursing home care and home health care accelerated.

  • Medicaid expenditures (9.7 percent) reached $545.1 billion in 2015, accounting for 17.0 percent of total national health expenditures. Medicaid’s growth rate of 9.7 percent followed growth of 11.6 percent in 2014, with the slightly slower 2015 growth attributed to slower growth in enrollment. ACA-related changes in Medicaid eligibility drove an 11.1 percent increase in enrollment in 2014, followed by slower estimated growth of 5.7 percent in 2015. However, on a per enrollee basis, Medicaid spending grew faster in 2015, increasing 3.8 percent compared to 0.4 percent in 2014 and reflecting states’ adoption of higher reimbursement rates. Growth in Medicaid spending for physician and clinical services and prescription drugs slowed, while spending for hospital care and other health, residential, and personal care services increased at a faster rate in 2015 compared to 2014.

Major goods and services’ spending growth included:

  • Physician and clinical services (6.3 percent) spending increased from a growth rate of 4.8 percent in 2014 to 6.3 percent in 2015, with total expenditures reaching $634.9 billion—or 20.0 percent of overall health spending. This was the first growth rate above 6.0 percent in a decade, driven by faster growth in nonprice factors, such as residual use and intensity of services. Spending for physician services increased 6.1 percent, while clinical services expenditures increased 7.2 percent. The growth in clinical services spending was driven by continued fast growth in outpatient care centers, such as community health centers, kidney dialysis centers, and outpatient mental health and substance abuse centers.

  • Hospital spending (5.6 percent) reached $1.0 trillion and represented 32.0 percent of overall health spending. Growth in expenditures for hospital care increased from 4.6 percent in 2014 to 5.6 percent in 2015. The faster growth in spending reflected continued strong growth in nonprice factors, such as the use and intensity of services. The main drivers of this faster growth in 2015 were private health insurance and Medicaid, with slower growth in Medicare hospital spending somewhat offsetting their effect. The number of inpatient days and hospital discharges increased by 1.8 percent and 1.2 percent, respectively, in 2015. This was the first time there have been two consecutive years of growth for both measures since the Census Bureau began tracking these utilization categories in 2005.

  • Retail prescription drugs (9.0 percent) spending reached $324.6 billion and represented 10 percent of overall health spending. Although the 2015 spending growth of 9.0 percent was slower than the rate of 12.4 percent in 2014, growth in prescription drug spending was faster than that of any other service in 2015. Recent rapid growth is attributed to increased spending on new medicines, price growth for existing brand-name drugs, increased spending on generics, and a decrease in the number of expensive blockbuster drugs with expiring patents.

About Health Affairs

Health Affairs is the leading journal at the intersection of health, health care, and policy. Published by Project HOPE, the peer-reviewed journal appears each month in print and online, with frequent Web First studies and health policy briefs published at The full text of each Health Affairs Web First paper is available free of charge to all website visitors for a one-week period following posting, it then switches to pay-per-view for nonsubscribers. Web First papers are supported in part by a grant from The Commonwealth Fund. You can also find the journal on Facebook and Twitter. Read daily perspectives on Health Affairs Blog. Download our podcasts, including monthly Narrative Matters essays, on iTunes. Tap into Health Affairs content with the iPad app.