I’ve been curious about trends in health care expenditures both level-setting on the relative size of health care expenditures and better understanding the relative growth.   Reviewing the CMS National Health Expenditures data was helpful in understanding emerging trends within the health services sector, which  accounts for $3.2 trillion in spend in 2015, or 17.4% of the US GDP in 2015. (2016 data will be available in December of 2017).

Expense Growth Based on Expense Categories
  1. Health Services Expenses Dwarf Retail Pharmacy and Other Goods Purchases.  Health services expenses across Hospitals, Clinics, and Long Term Care, Home Health account for 2.3 Trillion dollars in expenditures or 72% of the overall spend.
  2. Retail Prescriptions Represents the Highest Growth, Non-Administrative Cost Category:  Retail Expenses, largely driven by Prescription Spend, have the 2nd highest growth rate at 5.1%.  Retail Pharmacy accounts for 10% of total expenditures.  These numbers exclude pharmacy costs that roll up within the hospital, clinic, and long term care segments.
  3. Hospital Expenses Are Growing at 4.7% above Market Growth of 4.3%:  This is somewhat surprising given one of the Affordable Care Act’s (ACA) goals was to displace overuse of emergency rooms for routine treatment, potentially creating a growth lag on hospital care expenses.  However, increasingly hospitals are acquiring clinics and consolidating, potentially creating a drag on the professional services | clinic spend as they acquire practices to expand revenues.
  4. Insurance Administration Costs:  Insurance administration costs represents 8% of expenditures, growing at 6.1%.   Given these costs are not directly tied to medical care delivery, it’s interested to see how rapidly they are growing vs. the overall totals.
  5. Long Term Care and Home Health have lower than Market Growth Rates.  Long Term Home Healthcare costs are growing at 3.7%, 0.6% lower than the market average.  This is surprising giving the aging population should be increasingly accessing more of these services.

NHE 2015 by Expense Group


Expense Growth Based on Expense Types
  1. Government Payors Already Account for 50% of Health Care Expenditures Medicare and Medicaid are the largest components of spend $1.2 trillion. Other Federal, State and Local programs brings the total government outlay closer to $1.6 trillion dollar, or 50% of the total expenses.
  2. Medicaid Represents the Largest Growth Category  Medicaid is the highest growth category, growing at 6.1% versus market growth of 4.3%.  This is driven largely due to the expansion of the Medicaid program under Obamacare | Affordable Care Act.
  3. Out of Pocket Costs are Going Down as a Percentage of Overall Spend   Given an increased percentage of the population is covered by insurance due to the ACA, out of pocket costs growth has been lower than the overall market.

NHE 2015 by Expense Type

Data Sets Available on Tableau Public

See below for the data sets available to access now on Tableau Public:

Notes to CMS Data


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