US health spending rises at fastest rate in eight years, federal study says

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US health spending rises at fastest rate in eight years, federal study says - The Boston Globe insurance

Health care spending accelerated nationally last year as more Americans got insurance and received medical care, according to a new federal study that could become ammunition in the upcoming fight over President-elect Donald Trump’s plan to scrap the Affordable Care Act.

The United States spent $3.2 trillion on health care in 2015, a 5.8 percent increase over 2014, and the highest rate in eight years, the study released Friday said. Spending rose 5.3 percent in 2014.

The authors of the report said the increase was largely driven by the addition of 20 million people to the ranks of the insured through the Affordable Care Act, also known as Obamacare. They said 9.7 million people bought private health insurance policies while 10.3 million enrolled in Medicaid, the government program for low-income individuals and families.

Americans used more hospital and other medical services last year, which drove spending higher. Outlays for prescription drugs, though moderating from 2014, still grew 9 percent.

The new figures were released as Trump prepares to take office and carry out a campaign promise of repealing and replacing President Obama’s health care law. Republican leaders in Congress have long sought to repeal the law, calling it unaffordable for the government and consumers.

It’s unclear exactly what changes Trump and lawmakers will push and how those moves will affect the millions of people who have obtained insurance through the current law.

Trump appointed key members of his health care team this week, including US Representative Tom Price of Georgia, a staunch opponent of the law, as secretary of health and human services, and Indiana health care consultant Seema Verma as head of the Centers for Medicare and Medicaid Services, or CMS.

Growth in health spending slowed during and after the Great Recession before picking up again in 2014. Health care costs equaled 17.8 percent of economic output last year. If the national health care law is repealed, spending may moderate or even fall in the years ahead, experts said — but at a cost.

“The likely effect of Republican plans to repeal and replace the ACA are to reduce the number of people with health coverage,” said Larry Levitt, senior vice president at the Kaiser Family Foundation in Menlo Park, Calif., which studies health policy. “That will bring spending down, but not necessarily in the way everyday consumers may like.”

If spending falls too sharply, it would have a significant effect on doctors, hospitals, drug companies, and medical device makers in Massachusetts, said Stuart Altman, a health economist who chairs the Massachusetts Health Policy Commission, a state agency that monitors costs.

“If all of a sudden that repeal takes place and the replacement is not nearly as generous, that means there is going to be a significant cutback of the flow of dollars into the health system, which means hospitals would get less money, doctors would get less money, which means layoffs,” he said.

The new study was conducted by CMS economists and statisticians and published in the journal Health Affairs. Obama administration officials called last year’s spending growth “modest” and said it shows that the Affordable Care Act is helping more people access insurance and medical care. But premiums for a key group of plans available under the law are set to jump an average of 25 percent next year.

National health spending per person grew 5 percent last year. In Massachusetts, it rose 4.1 percent, according to state figures.

Massachusetts is seeking to keep health spending growth to 3.6 percent a year, a target the state missed in 2015 and 2014. But the target has forced health care providers and insurers to remain focused on cost control, Altman said.