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Insurers Keep Their Share of US Health Spending

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(Related: The Agent’s Health Spending Data Survival Kit)

Private health insurers’ spending increased at a slow pace in 2017, and they may have hung on to more of their revenue.

A team of analysts at the Centers for Medicare and Medicaid Services (CMS) has published figures supporting that conclusion in a new batch of 2017 national health expenditures data.

The CMS team found that overall health spending increased 3.9% last year, to $3.5 trillion.

U.S. gross domestic product increased 4.2%.

Health spending amounted to 19.3% of GDP, up from 19% in 2016.

Private Health Insurers

Private health insurers increased their portion of national health spending 4.2%, to $1.2 trillion.

Private insurers’ spending on durable medical equipment increased 11%, to $11 billion.

But increases in most other types of private health insurer spending were modest.

Private health insurers managed to increase the “net cost of private health insurance,” or the amount left over for items such as administration costs, agent commissions and shareholder profits, to $144 billion, from $132 billion.

The net cost of private health insurance increased to 12.2% of private health insurance spending in 2017, up from 11.6% in 2016.

Other Spending Categories

Overall increases in most other health spending categories were also modest: Spending on every major category increased at a rate of 6.4% or less.

The much-criticized drug companies increased their share of the cash just 0.4%, to $333 billion.

Here’s what happened to spending in some other categories:

  • Hospital care: $1.1 billion. (Up 4.6%)
  • Physician and clinical services: $694 billion (Up 4.2%)
  • Nursing home care: $166 billion (Up 2%)
  • Home health care: $97 billion (Up 4.3%)
  • Basic medical research: $51 billion (Up 6.5%)


The CMS analysts have posted an article summarizing 2017 national health expenditures figures in an article on the website of Health Affairs, an academic journal that focuses on health care finance and health care delivery systems.

A copy of that article is available, behind a paywall, here.

The tables the analysts used to create the article are available here.

— Read Private Health Insurers Face ACA Money Squeezeon ThinkAdvisor.

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