National healthcare spending grew in 2018

December 9, 2019
Keith A. Reynolds
Keith A. Reynolds

Healthcare spending grew at 4.6 percent in 2018 to $3.6 trillion, which was faster than 2017.

The rate of healthcare spending growth in the U.S. increased to 4.6 percent in 2018 to $3.6 trillion, or about $11,172 a person, according to a new analysis from the Office of the Actuary at the Centers for Medicare & Medicaid Services (CMS).

The analysis will appear in the January 2020 issue of Health Affairs.

This rate was higher than the 4.2 percent rate from 2017 but equal to the rate in 2016. The analysis says the 0.4 percent rate increase was due to faster growth in private insurance and Medicare caused by the net cost of health insurance.

At the same time, for the second year in a row, the number of uninsured people in the country grew by 1 million to an overall 30.7 million people in 2018.

The share of the country’s gross domestic product devoted to healthcare spending dropped from 17.9 percent in 2017 to 17.7 percent in 2018.

The net cost of health insurance rose 13.2 percent in 2018, after increasing 4.3 percent the previous year. This faster growth rate can be attributed to the health insurance tax, which was reinstated after a one-year moratorium. Personal healthcare spending remained at 4.1 percent between 2017 and 2018, according to the analysis.

National health spending grew 4 percent on a per capita basis in 2018 compared to 3.5 percent the prior year due to faster growth in medical prices offsetting slower growth in the use and intensity of healthcare goods and services. Medical price growth increased 2.1 percent in 2018 compared to 1.3 percent in 2017, the analysis says.

"Healthcare spending growth picked up across all major payers in 2018 as medical prices grew faster, due in part to the reinstatement of the health insurance tax on all health insurance providers," says Micah Hartman, a statistician in the CMS Office of the Actuary and first author of the Health Affairs article. "However, economic growth outpaced healthcare spending and the share of the economy devoted to healthcare fell."

Other insurance increases identified in the analysis include:

·      Private health insurance: Increased 5.8 percent to reach $1.2 trillion in 2018 accounting for 34 percent of total national health spending. Enrollment in private health insurance declined 0.8 percent.

·      Medicare spending: Increased 6.4 percent to reach $750.2 billion in 2018 accounting for 21 percent of total healthcare spending. Medicare enrollment grew steadily to 2.6 percent.

·      Medicaid Expenditures: Increased 3 percent coming to $597.4 billion in 2018 making up 16 percent of national healthcare spending.