U.S. Health Care Spending Accelerates After Historic Lows
U.S. health care spending picked up last year after its steep slow down in 2013, a credit to the larger number of people who have insurance under the Affordable Care Act.
Overall health spending grew by 5.3% in 2014, up from 2.9% in 2013, according to a study by the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS). In total dollar terms, health spending hit $3 trillion last year–or $9,523 per person. Despite the overall spending pick up, growth in consumer out-of-pocket spending slowed down slightly to 1.3% from 2.4% the year before, which reflects the larger number of people with insurance coverage.
“Millions of uninsured Americans gained health care coverage in 2014,” said Andy Slavitt, the acting administrator at CMS.”And still, the rate of growth remains below the level in most years prior to the coverage expansion, while out-of-pocket costs grew at the fifth lowest level on record.”
Nearly 8.7 million more individuals gained health insurance as part of the ACA in 2014 compared to the year prior, which increased the insured share of Americans to 88.8% from 86% in 2013. That’s the highest share since 1987, according to CMS.
While the higher number of insured people helped push up overall spending, the rising costs of prescription drugs also added to the bottom line. Spending on prescription drugs expanded 12.2% in 2014 compared to 2.4% growth in 2013. Much of that growth is due to expensive specialty drugs, including drugs that treat hepatitis C. New and more effective hepatitis C treatments, developed by Gilead Sciences (GILD) and AbbVie (ABBV), hit the market for the first time in 2014 with hefty price tags. The drugs can cost as much as $84,000 for a course of treatment.
Drug prices have become a central concern for both patients and politicians in recent months after a drastic price increase by Turing Pharmaceuticals for its drug Daraprim captured headlines. Other pharmaceutical companies, like Valeant (VRX), have since been called out for their ever-increasing prices, especially for older off-patent medications. The move has sparked comments from presidential candidates as well as a federal investigation.