Health spending slows year over year, CMS study finds

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Friday, December 7, 2018

WASHINGTON – Overall health spending grew 3.9% in 2017, almost 1% slower than 2016, according to a study conducted by the Office of the Actuary at CMS and published this week by Health Affairs. Medicare spending grew 4.2% in 2017 vs. 4.3% in 2016. Slower growth in fee-for-service Medicare spending (1.4% in 2017 vs. 2.6% in 2016) offset faster growth in Medicare private health plan spending (10% vs. 8.1%). The trends in Medicare FFS and Medicare private health plan spending are attributed, in part, to an increased share of all Medicare beneficiaries enrolling in Medicare Advantage. Medicaid spending slowed, increasing 2.9% in 2017 vs. 4.2% in 2016. The reason: a deceleration in enrollment growth, and a reduction in net cost of Medicaid health insurance from an increase in recoveries from Medicaid managed care plans. State and local Medicaid expenditures grew 6.4%, while federal Medicaid expenditures increased less than 0.8%. Out-of-pocket spending, which includes direct consumer payments like copays and deductibles, grew 2.6% in 2017 vs. 4.4% in 2016.