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Report: U.S. health spending hits $3.5T but growth slows

A staggering $3.5 trillion is spent on health in the U.S. but spending has slowed for the second year in a row.
/ Source: The Associated Press

WASHINGTON (AP) — The nation’s health care tab hit $3.5 trillion last year, or $10,739 per person, the government reported Thursday. But behind those staggering figures was some fairly good news:

The rate of growth slowed for the second year in a row, according to economic experts at the federal Health and Human Services department.

Health care spending increased by 3.9 percent in 2017, following a 4.8 percent increase in 2016.

Private insurance spending grew more slowly in 2017, and so did Medicaid, while Medicare costs grew at about the same rate. The overall economy grew faster than health spending.

If moderate growth can be maintained, that would make the U.S. health care system more manageable for families, employers and government.

In recent years, insurance coverage expansion under former President Barack Obama and large increases in prescription drug spending had led to faster growth.

But the report found a slight dip in coverage last year and a minimal increase in prescription drug spending, less than half of 1 percent. It was the slowest increase in drug costs since 2012. The spike caused by the introduction of expensive new medications for hepatitis C infection has passed, but it’s too soon to tell if a new trend has started.

The per capita spending number of $10,739 is an average across the entire population. In actuality, the sickest patients account for the vast majority of health care costs. Five percent of the population accounts for nearly half of total spending.

The last decade has seen a significant slowdown in the growth of U.S. health care spending, the report found. Annual increases averaged 4.3 percent from 2008-2017, compared with 7.3 percent from 1998-2007. But that doesn’t mean the nation has solved its problem of high health care costs.

“For a health sector that now accounts for nearly one-fifth of the US economy, future increases in health care expenditures will likely lead to policy decisions focused on affordability and sustainability,” the report concluded. It was published online by the journal Health Affairs.