Growth in Health Spending Picked Up Speed in 2014

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National health expenditures grew more quickly in 2014 than in recent years, according to a new report by actuaries at the Centers for Medicare and Medicaid Services (CMS). While the five previous years saw historically slow growth, in 2014 spending increased by 5.3 percent.

This pushed total health care spending as a share of the economy up to 17.5 percent.

Increased spending on health care had been widely expected, given the continued economic recovery and expanded insurance coverage through the Affordable Care Act (ACA).

Last year was the ACA’s first full year of insurance expansion, and the number of uninsured individuals fell by 8.7 million. The insured population rose from 86 percent of the country in 2013 to 88.8 percent last year — the highest in nearly three decades.

More surprising was a dramatic increase in spending on prescription drugs that affected people with private insurance, Medicare and Medicaid. Such spending grew by 12.2 percent in 2014, up from a 2.4 percent increase in 2013. While insurance expansion contributed to last year’s increase, the actuaries say new Hepatitis C treatments have had an outsized influence on spending growth.

While there are numerous experiments, pilot projects and government or private-sector attempts to get a handle on health system costs, there hasn’t been as much action on prescription-drug cost growth. This new data should spark policymakers to pursue effective solutions.

External links:
National Health Spending in 2014 (CMS Actuaries in Health Affairs)
Impact Of New Hepatitis C Drugs On National Health Spending (Altarum Institute Blog)
CEA Chairman’s Blog Post on 2014 Data (White House)

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