More Uninsured People, Faster Growth in Health-Care Spending -- Update
December 05 2019 - 5:31PM
Dow Jones News
By Stephanie Armour
More Americans are going without health coverage and the pace of
spending on health care nationally is rising in part because of an
Affordable Care Act tax on insurers, Trump administration officials
said Thursday.
A federal report from actuaries at the Centers for Medicare and
Medicaid Services documented trends that are likely to further fuel
the battle between Republicans and Democrats over how to slow
health-care spending growth that has already put the U.S. far ahead
of most comparable wealthy countries.
Overall, national health-care spending rose to $3.65 trillion in
2018, up 4.6% from 2017. The U.S. spent $11,172 per person, and
national health-care spending accounted for 17.7% of the economy
last year, compared with 17.9% in 2017.
The data indicate some notable shifts related to changes in
insurance coverage, the price of drugs and legislative actions.
Retail prescription drug prices declined by 1% in 2018, the
first drop since 1973. The decrease reflects a decline in generic
drug prices and relatively slow growth in prices for brand-name
drugs, officials said. President Trump has angered Democrats by
taking credit for prescription-drug prices he says are falling, and
the data may fuel further scrutiny over the effectiveness of
administrative policies to spur greater use of generics.
The number of people without insurance rose by 1 million in 2018
for the second consecutive year, with 30.7 million individuals
uninsured.
While the overall acceleration in national health-care spending
wasn't that large relative to other years, an Affordable Care Act
tax accounts for most of the increase, according to the report. The
tax, an annual fee on all health insurers, is among several imposed
under the law to cover its estimated 10-year cost of more than $1
trillion.
The tax has been controversial, with consumer and industry
groups saying it will raise premiums and hurt consumers. Congress
suspended the tax in 2017 and 2019. It is slated to kick in again
in 2020.
Federal officials on Thursday linked the tax to a rise in the
net cost of private insurance, which includes factors such as
insurers' costs for premium taxes and bills. The cost grew 15.3%
last year to $164 billion, its fastest rate of increase in 15
years.
Officials said the growth in the net cost of insurance was also
behind some of the growth in spending on Medicaid, a federal-state
program for low-income and disabled people. Overall spending on the
program increased 3% to about $598 billion in 2018.
The impact of the tax in 2018, when it was in effect, could
provide a glimpse at its implications for future years and
galvanize its opponents. A coalition of industry and consumer
groups are lobbying for a two-year delay. The levy, known as the
"HIT tax," is expected to generate $15.5 billion in 2020, according
to the Internal Revenue Service.
Officials also said the tax played a role in a 6.7% increase in
spending last year on per-enrollee private health insurance -- the
amount spent per person on health coverage, including premiums paid
to managed care, self-insured health plans and others -- which is
the highest growth rate since 7.5% in 2004.
"It was responsible for a significant portion of the rise we
saw," said Micah Hartman, the report's lead author.
The national spending data provides a window into the areas of
the industry that are driving increases as well as the factors
behind that rise.
On average, wealthy European countries spend about half as much
per person on health care than the U.S. does, according to the
Kaiser Family Foundation. In 2016, the U.S. had the lowest life
expectancy of 12 comparable countries despite the higher
spending.
Health-care spending is expected to accelerate as baby boomers
age and as prices for medical services grow. Health care's share of
the economy is projected to climb to 19.4% by 2027 from 17.9% in
2017, according to a federal report from February.
The rise in federal health-care spending is evident now. Last
year, growth in Medicare spending rose 6.4% compared with 4.2% in
2017, reaching $750.2 billion. Enrollment in the federal health
program for seniors and the disabled was largely unchanged.
One factor driving spending increases is medical prices, such as
the cost of procedures. The 2.1% growth in medical prices last
year, which was largely caused by inflation, was the most rapid
since 2011.
Personal health-care spending grew at the same rate in 2018 as
in 2017, as slower growth in the use of services was offset by
faster growth in prices. Last year, the increase in U.S. per capita
spending rose to 4%, up from 3.5% in 2017, in large part because of
rising growth in medical prices, officials said.
In addition, retail prescription drug spending rose 2.5% last
year, up from 1.4% in 2017, as spending on new cancer and
autoimmune drugs was offset by a decline in price growth and more
use of generic drugs.
Write to Stephanie Armour at stephanie.armour@wsj.com
(END) Dow Jones Newswires
December 05, 2019 17:16 ET (22:16 GMT)
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