National Health Spending in 2014: Faster Growth Driven by Coverage Expansion

and Prescription Drug Spending

Anne MartinMicah Hartman

Joe BensonAaron Catlin

andThe National Health Expenditure Accounts Team

Overview

National health spending reached $3.0 trillion, or $9,523 per person in 2014.

National health spending increased 5.3 percent in 2014 following 2.9 percent growth in 2013.

The share of Gross Domestic Product (GDP) devoted to health was 17.5 percent in 2014—up from a 17.3 percent share in 2013.

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

Growth in National Health Expenditures and Gross Domestic Product, 1988-2014

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group; U.S. Department of Commerce, Bureau of Economic Analysis and National Bureau of Economic Research, Inc.

Annu

al P

erce

nt C

hang

e

GDP: 4.1%

NHE: 5.3%

July 1990- March 1991 Recession

March 2001- November 2001

Recession

Calendar Years

December 2007-June 2009Recession

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

National Health Expenditures as a Share of Gross Domestic Product, 1988-2014

Calendar Years

Perc

ent o

f GD

P

17.5%March 2001- November 2001Recession

July 1990- March 1991Recession

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group; U.S. Department of Commerce, Bureau of Economic Analysis and National Bureau of Economic Research, Inc.

December 2007 -June 2009

Recession

Drivers of Faster Growth in 2014

Coverage expansions as a result of the ACA

Medicaid

Private Health Insurance

Rapid growth in total retail prescription drug spending

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

Enrollment in Private Health Insurance and Medicaid, 2013 and 2014

2013 2014 Difference

Private Health Insurance (PHI) 187.7 189.9 +2.2

Medicaid 58.2 65.9 +7.7

Medicaid Newly Eligible 6.3 +6.3

Uninsured 44.2 35.5 -8.7

Uninsured Share of Population 14.0% 11.2% -2.8%

NOTE: Enrollment estimates are not mutually exclusive. Marketplace enrollment is included in the private health insurance category of the National Health Expenditure Accounts. The estimate of Marketplace enrollment for 2014 was 5.4 million and reflects average monthly enrollment and not enrollment at the end of the year.

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

Factors Accounting for Growth in Per Capita National Health Expenditures, Selected Calendar Years 2004-2014

NOTES: Medical price growth, which includes economywide and excess medical-specific price growth (or changes in medical-specific prices in excess of economywide inflation), is calculated using the chain-weighted national health expenditures (NHE) deflator for NHE. "Residual use and intensity" is calculated by removing the effects of population, age and sex factors, and price growth from the nominal expenditure level.

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

2004-2008 2009 2010 2011 2012 2013 2014-0.5%0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%5.0%5.5%6.0%6.5%

Residual use and intensity Age and sex factors Medical prices Per capita spending growth

Annu

al P

erce

nt C

hang

e

Per capita health spending grew 4.5% in 2014

The Nation’s Health Dollar, Calendar Year 2014: Where It Went

NOTE: “Other spending” includes Dental services, Other professional services, Home health care, Durable medical equipment, Other nondurable medical products, Government public health activities, and Investment.

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

Hospital care; 32%

Physician and clinical services; 20%Nursing care facilities and continuing

care retirement communities; 5%

Prescription drugs; 10%

Government administra-tion and net cost of health

insurance; 8%

Other health, residential, and personal care; 5%

Other spending; 20%

Annual Growth in Spending by Type of Good and Service, 2013 and 2014

Durable medical equipment

Other nondurable medical products

Home health care

Other professional services

Dental services

Other health, residential, and personal care

Nursing care facilities and continuing care retirement communities

Prescription drugs

Physician and clinical services

Hospital care

National Health Expenditures

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0

3.2

2.4

4.8

5.2

2.8

4.1

3.6

12.2

4.6

4.1

5.3

2.8

3.5

3.3

3.5

1.5

4.7

1.3

2.4

2.5

3.5

2.9

2013 2014

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

2014 highlights:• Total spending = $971.8 billion• Spending increased 4.1%• Faster growth in 2014 driven by:

– Medicaid– Private Health Insurance – Medicare– Residual use and intensity

Annual Growth in Hospital Spending, 2010 - 2014

32%

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

2010 2011 2012 2013 20140.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

5.1

4.3

5.8

3.5

4.1

Annual Growth in Physician and Clinical Services Spending, 2010 - 2014

2014 highlights:• Total spending = $603.7 billion• Spending increased 4.6% • Faster growth in 2014 driven by:

– Medicaid– Private Health Insurance– Medicare– Residual use and intensity– Prices

20%

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

2010 2011 2012 2013 20140.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

3.2

4.7

4.1

2.5

4.6

Annual Growth in Retail Prescription Drug Spending, 2010- 2014

10%

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

2014 highlights:• Total spending = $297.7 billion• Spending increased 12.2%• Faster growth in 2014 driven by:

– Increased spending on new medicines• Hepatitis C

– Smaller impact from patent expirations

– Price increases for brand-name drugs

2010 2011 2012 2013 20140.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

0.1

2.2

0.2

2.4

12.2

The Nation’s Health Dollar, Calendar Year 2014: Where It Came From

NOTES: “Other third-party payers and programs” includes Worksite health care, Other private revenues, Indian Health Service, Workers’ compensation, General assistance, Maternal and child health, Vocational rehabilitation, Substance Abuse and Mental Health Services Administration, School health, and Other federal and state local programs.

“Out of pocket” includes co-payments, deductibles, and any amounts not covered by health insurance. Note: Sum of pieces may not equal 100% due to rounding.

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

Investment5%

Public health activity3%

Other third-party payers

and programs8%

Out of pocket11%

Health in-surance

73%

Medicare

Medicaid

Private health

insurance

VA, DOD, and CHIP

16%

20%

33%

4%

Annual Growth in Spending by Source of Funds, 2013 and 2014

CHIP (Title XIX and Title XXI)

Department of Defense

Department of Veterans Affairs

Other third-party payers and programs

Out of pocket

Medicaid (Title XIX)

Medicare

Private health insurance

National Health Expenditures

-4.0 -2.0 0.0 2.0 4.0 6.0 8.0 10.0 12.0

-2.3

4.6

8.2

6.0

1.3

11.0

5.5

4.4

5.3

6.8

-1.4

6.2

6.3

2.1

5.9

3.0

1.6

2.9

2013 2014

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

Private Health Insurance: Growth in Enrollment, Total, and Per Enrollee Expenditures, 2010 – 2014

2010 2011 2012 2013 2014-4%

-2%

0%

2%

4%

6%

8%

-0.1%

1.2%1.6%

4.4%

5.8%

5.0%

1.9%1.7%

3.2%

PHI Enrollment Growth PHI Expenditure GrowthPer Enrollee PHI Expenditure Growth

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

33%

2014 highlights:• Total Spending = $991.0 billion• Spending increased 4.4%• Enrollment grew 1.2%• Per enrollee growth 3.2%• Faster growth driven by:– ACA expansion– Retail prescription drugs

Medicare: Growth in Enrollment, Total and Per Enrollee Expenditures, 2010 – 2014

2010 2011 2012 2013 2014

-2%

0%

2%

4%

6%

8%

3.2% 3.1%3.0%

5.5%

1.8%

2.4%

0.1%

-0.2%

2.4%

Medicare Enrollment GrowthMedicare Expenditure GrowthPer Enrollee Medicare Expenditure Growth

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

2014 highlights:• Total Spending = $618.7 billion• Spending increased 5.5%• Enrollment increased 3.1%• Per enrollee growth 2.4%• Faster growth in 2014 due to:

— Increased utilization of services

— Increased prescription drug spending

— Increased physician and clinical services spending

20%

Medicare: Growth in FFS and Medicare Advantage Enrollment, Total Spending, and Per Enrollee Spending, 2010 – 2014

2010 2011 2012 2013 2014-2%

0%

2%

4%

6%

8%

10%

12%

1.0%0.4%

1.3%

3.1%2.7%

2.6%

0.0%0.3%

2.7%

Fee-for-Service (70%)

FFS Enrollment FFS Spending Per FFS enrollee

2010 2011 2012 2013 2014-2%

0%

2%

4%

6%

8%

10%

12%

9.4%

10.0%

7.7%

11.6%

-1.0%

1.6%0.4%

-1.5%

1.5%

Medicare Advantage (30%)

MA Enrollment MA Spending Per MA enrollee

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

20%

Medicaid: Growth in Enrollment, Total, and Per Enrollee Expenditures, 2010 – 2014

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

16%

2010 2011 2012 2013 2014-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

1.7%

13.2%

5.9%

11.0%

-0.8% -0.5%

1.4%

4.1%

-2.0%

Medicaid Enrollment GrowthMedicaid Expenditure GrowthPer Enrollee Medicaid Expenditure Growth

2014 highlights:• Total Spending = $495.8 billion• Spending increased 11.0%• Enrollment increased 13.2%• Faster growth in 2014 due to: – ACA enrollment expansion

• Per enrollee declined 2.0%• Newly insured tended to be

lower cost adults and children

Medicaid: Growth in Total, Federal, and State & Local Expenditures,

2010 – 2014

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

2010 2011 2012 2013 2014

6.1%

2.3%3.8%

5.9%

11.0%

7.7%

-7.2%

-1.7%

6.1%

18.4%

2.9%

21.8%

12.4%

5.5%

0.9%

Total Federal State & local

16%

National Health Expenditures: Distribution and Growthby Type of Sponsor

2013 20140%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

20% 20%

29% 28%

7% 7%

26% 28%

18% 17%

Distribution by Type of Sponsor

State & local government

Federal government

Other private revenues

Households

Private business

2011 2012 2013 2014-2%

0%

2%

4%

6%

8%

10%

12%

14%

Annual Growth by Type of Sponsor

State & local government Federal government

Private business Households

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

Note: Sum of pieces may not equal 100% due to rounding.

2014 National Health Expenditure Accounts:Summary

National Health Expenditures reached $3.0 trillion, or $9,523 per person in 2014

National Health Expenditures represented a 17.5 percent share of Gross Domestic Product (GDP)

Health spending grew faster at 5.3% in 2014 after several years of low growth

Return to faster growth and increased share of GDP were largely influenced by the coverage expansions of the ACA and rapid prescription drug spending growth

SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.