Policy & Regulation News

National Health Spending Reached $2.9T in 2013

By Ryan Mcaskill

The latest report shows healthcare spending has reached $2.9 trillion in 2013 at a growth rate of 3.6 percent.

- Healthcare is a trillion dollar a year business and the latest numbers show that in 2013, the total national health expenditures in the United States reached $2.9 trillion, or $9,255 per person.The 2013 totals (3.6 percent) represent the lowest annual growth rate since 1960 and continues a five year low growth rate of between 3.6 percent and 4.1 percent annually.

These numbers come from the Office of the Actuary (OACT) at the Centers for Medicare and Medicaid Services (CMS) and are published by Health Affairs. The annual report provides the most comprehensive look at where the nation’s healthcare dollars go. The recent low rates of national health spending growth coincide with a modest growth in Gross Domestic Product, which averaged 3.9 percent per year since 2010. This keeps the share of the economy devoted to health remained unchanged over the last few years at 17.4 percent.

“This report is another piece of evidence that our efforts to reform the health care delivery system are working,” said CMS Administrator Marilyn Tavenner. “To keep this momentum going, we are continuing our efforts to shift toward paying for care in ways that reward providers who achieve better outcomes and lower costs.”

Spending in healthcare was spread out over several sections. Hospital Care spending is responsible for the largest chunk of healthcare spending, 32 percent or $936.9 billion. That is an increase of 4.3 percent in 2013, which is smaller than the 5.7 percent growth that was seen in 2012. This slowdown is contributed to slower growth in both price and non-price factors.

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  • Spending for physicians and clinics service is the second biggest factor, 20 percent or $586.7 billion. The 2013 growth rate was 3.2 percent, which is 0.7 percent lower than 2012. Slower price growth is the main factor for the slowdown. The growth in spending from private health insurance and Medicare, the two largest payers of these services, experienced slower spending growth in 2013, while Medicaid growth accelerated as a result of temporary increases in payment to primary care physicians.

    The third highest section is prescription drugs (271.1 billion), which equals nine percent of total spending. That is a growth rate of 2.5 percent in 2013. The faster growth in 2013 resulted from price increases for brand-name and specialty drugs, increased spending on new medicines and increased utilization.

    Medicare spending represents 20 percent of national health spending in 2013, grew 3.4 percent to $587.7 billion, a slowdown from growth of 4.0 percent in 2012. This was caused by a deceleration in Medicare enrollment growth and the impact of the Affordable Care Act and sequestration. Medicaid spending grew 6.1 percent in 2013 to $449.4 billion, an acceleration in provider reimbursement rates and some states’ expanding benefits.