Spending Growth on Nursing Home Care Drops to Slowest Rate Since 2013 — Even as Overall Health Outlays Accelerate

Total spending on health care in the United States increased by 4.6% in 2018, a faster rate than the previous year — but at the same time, nursing homes and other post-acute care settings saw spending growth slow down from 2017.

All payer sources laid out a total of $168.5 billion on care at nursing facilities and continuing care retirement communities (CCRCs) in 2018, according to the latest set of data from the Centers for Medicare & Medicaid Services (CMS) Office of the Actuary.

CMS and the journal Health Affairs published the results Thursday.

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That represents a growth rate of just 1.4%, down from a 2.0% gain in 2017 — and the slowest pace since 2013, when nursing homes and CCRCs received just a 1.1% boost in spending.

The analysis found overall health expenditures sitting at $3.6 trillion for 2018, a 4.6% boost from 2017’s total haul of $3.5 trillion, driven primarily by overarching increases in insurance costs. Total federal government spending on health care, for instance, accelerated at a rate of 5.6% in 2018, largely due to an increase in the federal share of Medicare and Medicaid burdens.

Medicare Advantage also continued its steady growth trajectory, with plans seeing a spending gain of 11.8% in 2018 — up from 9.9% the year before.

“Continued faster enrollment growth in these plans, compared to fee-for-service Medicare, increased the share of enrollment in private plans to 35 percent of total Medicare enrollment in 2018,” CMS observed. “At the same time, Medicare private health plans also continued to account for a larger portion of total Medicare spending, at 36 percent in 2018 — a 6-percentage-point increase since 2014.”

For nursing facilities, part of the spending-growth slowdown was the result of declining use and intensity of nursing home services, Health Affairs found. But while there have been widespread efforts to cut the use of institutional skilled nursing services in favor of the less-expensive home health setting, particularly for post-acute care — from both government payers and private insurance plans — nursing homes weren’t alone in the decline.

“The services that experienced slower growth in the use and intensity of services in 2018 included hospital care, physician and clinical services, dental services, home health care, and nursing care facilities and continuing care retirement communities,” CMS found.

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