American health spending slowed in 2016, according to federal report

Health care spending rose 4.3 percent last year to $3.3 trillion after a 5.8 percent increase in 2015. 

In an online report and a media conference call, CMS attributed faster spending growth in 2014 and 2015 to the implementation of the federal Affordable Care Act and its related Medicaid expansion, which together extended health insurance to nearly 19 million people. The ACA requires most Americans to carry medical insurance – a mandate that would be repealed by the Senate tax overhaul plan.

Authors of the CMS report said spending growth slowed last year for all three major categories of medical goods and services – hospitals, physician/clinical services and retail prescription drugs – for the first time since 2010. And they told reporters they could not recall another time before last year that spending growth had slowed for all three major payers – private health insurance, Medicare and Medicaid – and for goods and services, too.

Private health insurance spending climbed 5.1 percent to $1.1 trillion last year, Medicare spending increased 3.6 percent to $672.1 billion, and Medicaid spending rose 3.9 percent to $565.5 billion. All three increases were well below growth rates of the previous two years; for example, Medicaid spending jumped 11.5 percent in 2014 and 9.5 percent in 2015.