CMS Reports on Past Year’s Health Care Spending

A recent report released by the Centers for Medicare and Medicaid Services (CMS) shows that spending on health care grew by 3.7% from the previous year. This small increase continues a four-year trend of small increases/small growth in spending the last four fiscal years. 

However, it is safe to say that this slow growth in spending will increase in the next two fiscal years as the Affordable Care Act’s provisions roll out, more consumers attain coverage through the ACA and the hospital industry continues its consolidation.

To summarize the report, we took a look at the main areas where spending both increased and decreased.

This report looked at all areas of health care spending.  The “spending” was done by the consumers, insurance companies, Medicare and Medicaid.  The areas where funds were spent include: Physicians, Pharmaceuticals, Hospital Services, Nursing Homes, Research, and other health care services.

A breakdown of these categories shows that the top areas where spending increased from the previous year were; 

  1. Hospital Services: (increase of 4.9%). The biggest “spenders” in this category were private health insurance payers and Medicare.
  2. Physician Services: (increase of 4%). The biggest “spenders” in this category were consumers, due to increased cost sharing/high deductible plans, Medicare and private health insurance payers.
  3. Medicaid spending: (increase of 3.3%). Main factors for this continue to be the crawl out of the recession/improvements in the unemployment rate.

A breakdown of these categories shows that the top areas where spending decreased from the previous year were; 

  1. Pharmaceuticals: (decrease of 2.1%) Rise in lower-cost generic drugs vs. name brand drugs. 
  2. Nursing Homes: (decrease of 2.7%) Reimbursement reductions from Medicare to skilled nursing facilities. 
  3. Private insurance premiums: (decrease of 0.2%) Increase of high-deductible plans which generally have lower premiums
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