Total US healthcare costs hit $3.6 trillion in 2018

Total US healthcare costs hit $3.6 trillion in 2018

por Thomas Dworetzky, Contributing Reporter | December 31, 2019
Business Affairs
Total national healthcare spending in 2018 grew 4.6 percent — slower than the overall GDP growth of 5.4 percent for the same period, said a new report by the CMS Office of the Actuary.

The study appeared online in the journal Health Affairs.

“Spending has to slow down when it gets so big,” Paul Hughes-Cromwick, the co-director of sustainable health spending strategies at the research group Altarum, told The New York Times. “There’s no question that there are efforts all across the environment to try to control this beast. There’s no question about that, and some of them are working.”

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The slowing had the effect of cutting the overall share of the economy for healthcare spending from 17.9 percent in 2017 to 17.7 percent in 2018. Total national healthcare costs hit $3.6 trillion in 2018, which translates to $11,172 per person.

Hospitals accounted for the biggest part of healthcare spending — $1.2 trillion, or 33 percent of the total spend in 2018, according to the report.

Private health insurance, Medicare, and Medicaid grew faster in 2018, impacted by the reinstatement of the health insurance tax on private health insurance, Medicare Advantage, and Medicaid Managed care.

Medicare spending was 21 percent of total healthcare spending — and was up 6.4 percent to $750.2 billion in 2018, impacted again by the insurance tax on Advantage plans.

Medicaid spending accounted for 16 percent of total health spend — up 3 percent to $597.4 billion, again influenced by the the health insurance tax.

Out-of-pocket spending accounted for 10 percent of the total and grew 2.8 percent to $375.6 billion in 2018.

Physician and clinical services accounted for 20 percent of spending — up 4.1 percent to $725.6 billion in 2018 — slower than 2017's 4.1 percent growth rate.

Hospitals had recently been a focus of administration efforts to battle costs, when new rules were issued that would require disclosure of the rates paid to insurers prior to patients getting services.

Hospitals groups sued the government last week in an effort to challenge the rules' legality.

“Instead of giving patients relevant information about costs, this rule will lead to widespread confusion and even more consolidation in the commercial health insurance industry," Rick Pollack, president and CEO of AHA, said in a statement at the time.

The administration countered strongly.

“Hospitals should be ashamed that they aren’t willing to provide American patients the cost of a service before they purchase it," HHS spokeswoman Caitlin Oakley told The Hill last week. "President Trump and Secretary Azar are committed to providing patients the information they need to make their own informed health care decisions, and will continue to fight for transparency in America’s health care system.”

“With hospital prices increasing 2.4 percent in 2018 — and with price increases driving the growth we’re seeing in hospital spending — why wouldn’t we want to make hospital prices transparent?” CMS administrator Seema Verma tweeted Thursday.

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