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NHE: Healthcare spending was on the rise in 2019, though the increase was stable

Health spending increased at a slightly faster rate than gross domestic product, but the report analyzed figures prior to the pandemic.

Jeff Lagasse, Associate Editor

Total healthcare spending in 2019 went up $3.8 trillion in 2019, a relatively stable increase of 4.6% compared to 2018, which saw a 4.7% increase, according to the 2019 National Health Expenditures report, released today by the Centers for Medicare and Medicaid Services' Office of the Actuary.

The estimates only take into account trends through the end of 2019 and don't factor in the impacts of the COVID-19 pandemic, which is still surging throughout the country despite the U.S. embarking on vaccine distribution efforts.

At 17.7%, healthcare spending was stable compared to the 17.6% share recorded in 2018, and occurred as health spending increased at a slightly faster rate than gross domestic product.


It's hard to see these CMS numbers as relevant, since spending as a result of the pandemic is not figured into the health expenditures trends.

Overall and out-of-pocket healthcare spending is expected to be high as the COVID-19 coronavirus pandemic continues to affect daily life for billions across the globe. Data analyzed by researchers from the Peterson-Kaiser Family Foundation Health System Tracker earlier this year have attempted to quantify these costs, estimating that the cost of inpatient admissions for COVID-19 treatment could top $20,000.

The study authors arrived at that figure by looking at the total cost of treatment for an inpatient admission for pneumonia among large employer plans, based on 2018 figures. With major complications or comorbidity, total costs for admission -- including the amount paid by insurance as well as the amount paid out-of-pocket -- average $20,292.

With minor complications or comorbidity, that number drops to $13,767. Without complications, the amount is $9,763.

The CMS trends are the result of faster growth in healthcare spending combined with a decline in the net cost of health insurance. Spending for personal healthcare increased more than 5% in 2019, driven by faster growth in hospital care, physician and clinical services, and retail prescription drugs.

The decline in the net cost of insurance was spurred by a health insurance tax that saw a fee charged to insurance companies to charge for insurance, according to Ann Martin, lead author of the report and an economist at the National Health Statistics Group, Office of the Actuary.

Spending for hospital care accounted for 31% of healthcare spending, a 6.2% increase that puts it at $1.2 trillion. Growth in the use and intensity of services accounted for this, as well as a 2% rise in hospital prices.

Meanwhile, private insurance, Medicare and Medicaid saw faster growth in spending in 2019 compared to the previous year.

Private health insurance was the biggest payer, accounting for 31% of total healthcare spending, an increase to $1.2 trillion that was still a lower rate of growth than was seen in 2018. Medicare was the second biggest payer and saw faster growth in 2019 than in 2018. Private health spending accounted for 39% of Medicare expenditures, but the growth in fee-for-service Medicare spending slowed, increasing only around 3% in 2019.

Coming in last, Medicaid ate up a 16% share of healthcare spending, increasing 2.9%, a steady rate of growth compared to the year before. This was influenced by faster spending growth for most goods and services and a net decline in the price of insurance. Medicaid enrollment decreased 1.5% per enrollee, and spending growth increased more than 4%.


Between 2014 and 2018, per-person yearly spending for those with employer-sponsored insurance climbed from $4,987 to $5,892, an 18.4% increase, according to the 2018 Health Care Cost and Utilization Report released in 2019. The average annual rate of 4.3% outpaced growth in per-capita GDP, which increased at an average 3.4% over the same period.

There's an exception from 2017 to 2018, when per-capita GDP grew slightly faster than healthcare spending per person.

The $5,892 total includes amounts paid for medical and pharmacy claims, but does not subtract manufacturer rebates for prescription drugs.

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