New NHE data: Medicine prices declined, and hospitals were biggest driver of health care spending in 2018

According to new data from the National Health Expenditures (NHE), retail medicine prices declined by 1% and retail medicine spending grew just 2.5% in 2018. To put that in context, hospital spending, which continued to account for one-third of all health care spending, grew by 4.5%, and physicians and clinical services grew by 4.1%. This data, published in Health Affairs, underscores how policies that single out prescription medicine won’t fix soaring health care costs or lower out-of-pocket costs for Americans.

Other key data points include:

Total patient out-of-pocket spending grew 2.8% in 2018 — faster than 2.2% in 2017.
Overall health care spending growth (4.6%) was driven by a 13.2% increase in the net cost of health insurance.
Total spending for physician and clinical services grew 4.1%, to $725.6 billion.
Total spending for hospitals grew 4.5%, to $1.19 trillion in 2018.
Hospital spending was over three and a half times more than retail medicine spending in 2018, but patients paid over $12 billion more in out-of-pocket costs for their retail medicines.

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