U.S. healthcare spending skyrockets to $10K per person

Calculator on American flag
A new analysis from the Office of the Actuary at the Centers for Medicare & Medicaid Services and published by Health Affairs indicates that healthcare spending has exploded, reaching $3.2 trillion in 2015. Photo credit: Getty/MrLonelyWalker

The rising cost of private health insurance, hospital care, physician and clinical services, and prescription drugs are a few reasons that in 2015 healthcare spending in the United States grew at a rate of 5.8% and reached $3.2 trillion.

Those figures equate to $9,990 per person, according to a new report from the Office of the Actuary at the Centers for Medicare & Medicaid Services and published by Health Affairs.

The main drivers of the growth are increased use of services as millions of previously uninsured people gained insurance through the Affordable Care Act and increased spending for retail prescription drugs.

Indeed, spending on prescription drugs increased 9% in 2015. Although this is lower than the 12.4% growth in 2014, CMS noted it is significantly higher compared to 2.3% growth in 2013.

On a per-enrollee basis, overall spending increased by 4.5% for private health insurance, 1.7% for Medicare and 3.8% for Medicaid.

However, CMS said in a statement the annual rate is still below the rates of most years prior to the passage of the Affordable Care Act. Following the implementation of the healthcare reform law, 9.7 million individuals gained private health insurance coverage and 10.3 million more people enrolled in Medicaid coverage, according to the report.

"Our significant progress in reducing the nation's uninsured rate, while providing strong protections for Americans if they get sick, would not be possible without the Affordable Care Act," said CMS Acting Administrator Andy Slavitt in the announcement of the findings. "As millions more Americans have obtained health insurance, per-person cost growth remains at historically modest levels."  

Despite the significant changes in health coverage in 2014 and 2015, analysts predict health spending will increase in the next decade due to the aging of the population, changing economic conditions and faster medical price growth.

Other highlights from the report:

  • Growth in expenditures for hospital care increased from 4.6% in 2014 to 5.6% in 2015, reaching $1 trillion. Analysts noted that this was primarily due to nonprice factors, such as the use and intensity of services. The main drivers of this faster growth in 2015 were private health insurance and Medicaid, with slower growth in Medicare hospital spending somewhat offsetting their effect.
  • Physician and clinical services also rose from 4.8% in 2014 to 6.3% in 2015, with total expenditures reaching slightly less than $635 billion—or 20% of overall health spending. The growth in clinical services spending was driven by continued fast growth in outpatient care centers, such as community health centers, kidney dialysis centers, and outpatient mental health and substance abuse centers.
  • Total per-enrollee private health insurance spending increased by 4.5% in 2015, compared to average growth in per-enrollee spending of 7.4% during 2000-2009.
  • Medicare spending, which represented 20% of national total healthcare spending in 2015, grew 4.5% to $646.2 billion, slightly slower than the 4.8% growth in 2014. Medicare prescription drug spending had an 11% increase in 2015 following a 14.5% increase in 2014.
  • Medicaid spending, which totaled $545.1 billion, accounted for 17% of total spending on healthcare.
  • Out-of-pocket spending reached $338.1 billion. This figure includes direct consumer payments such as copayments, deductibles and spending not covered by insurance, excluding premiums.
  • Retail prescription drug spending continued to outpace overall health expenditure growth in 2015, increasing 9% to $324.6 billion after rising 12.4% in 2014. Growth in prescription drug spending was faster than that of any other service in 2015, according to the analysis. This is due in part to increased spending for new medicines, such as specialty drugs to treat hepatitis C, higher costs for existing brand name drugs, and increased spending on generics.