
Katherine Hempstead, PhD, MA, director and senior program officer, leads RWJF's work on health insurance coverage.
Current indications are that slow growth in health care spending will continue at least in the short term. The Altarum Institute’s most recent monthly trend report estimates that health care spending grew at a fairly modest 5.1 percent during the first five months of the year. The Centers for Medicare & Medicaid Services (CMS) projects an even lower 4.8 percent for the year as a whole, lower than the 5.5 percent growth in 2015. Yet this lull may be relatively short lived, as National Health Expenditures (NHE) are projected to grow by 5.7 percent in 2019 and 6.0 percent in 2025.
The Altarum report provides some clues about how different components of health care spending may be contributing to the current period of low growth. One interesting development is the near convergence of growth rates in spending on services and non-services. In particular, prescription drug spending—which has been growing significantly above trend for several years now—grew by an estimated 5.2 percent in May 2016. This is a far cry from just about a year ago, when drug spending was growing close to 12 percent. In fact, the current growth rate is the slowest since December 2013, which was just prior to the introduction of costly Hepatitis C therapies.
One factor behind this decline in prescription drug spending growth relates to the trajectory of sales of Hepatitis C medications. As shown by Altarum, there has been a marked decline in national sales of Hepatitis C therapies, with sales leveling off at about $2.4 billion for the first two quarters of 2016—approximately the volume seen in the first quarter of 2014.