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spending and private health insurance spending was offset by faster Medicare spending and out of pocket spending. Medicare and Medicaid together made up 76 percent of home health spending in 2017.
- Other Professional Services (3 percent share): Spending for other professional services reached $96.6 billion in 2017 and increased 4.6 percent, a slower rate of growth compared to the increase of 5.1 percent in 2016. Spending in this category includes establishments of independent health practitioners (except physicians and dentists) that primarily provide services such as physical therapy, optometry, podiatry, or chiropractic medicine.
- Other Non-durable Medical Products (2 percent share): Retail spending for other nondurable medical products, such as over-the-counter medicines, medical instruments, and surgical dressings, grew 2.2 percent (slower than the rate of growth in 2016 of 4.1 percent) to $64.1 billion in 2017.
- Durable Medical Equipment (2 percent share): Retail spending for durable medical equipment, which includes items such as contact lenses, eyeglasses and hearing aids, reached $54.4 billion in 2017 and increased 6.8 percent, which was faster than the 4.9 percent growth in 2016. The faster growth was driven by an acceleration in Medicare spending as well as continued strong growth in private health insurance and out of pocket spending which account for almost 70 percent of total durable medical equipment spending.
Health Spending by Major Sources of Funds:
- Private Health Insurance (34 percent share): Private health insurance spending increased 4.2 percent to $1.2 trillion in 2017, which was slower than 6.2 percent growth in 2016. The deceleration was driven in part by slower growth in medical benefits and a decline in fees and taxes resulting from the Consolidated Appropriations Act of 2016, which suspended collection of the health insurance plan fee in 2017.
- Medicare (20 percent share): Medicare spending grew 4.2 percent to $705.9 billion in 2017, which was similar to the rate of growth in 2016 of 4.3 percent. The growth in 2017 reflected slower growth in spending for Medicare fee-for-service (2.6 percent in 2016 to 1.4 percent in 2017) that was almost entirely offset by faster growth in Medicare spending for private health plans (8.1 percent in 2016 to 10.0 percent in 2017).
- Medicaid (17 percent share): Total Medicaid spending decelerated in 2017, increasing 2.9 percent to $581.9 billion compared to growth of 4.2 percent in 2016. The slower growth in 2017 was influenced by slower growth in enrollment and a reduction in the Medicaid net cost of health insurance. State and local Medicaid expenditures grew 6.4 percent, while federal Medicaid expenditures increased 0.8 percent in 2017.
- Out-of-Pocket (10 percent share): Out-of-pocket spending grew 2.6 percent in 2017 to $365.5 billion, which was slower than 4.4 percent growth in 2016.
Health Spending by Type of Sponsor1:
- In 2017, the federal government and households accounted for the largest shares of spending (at 28 percent each) followed by private businesses (20 percent), and state and local governments (17 percent).
- Federal government spending on health slowed in 2017, increasing 3.2 percent after 4.9 percent growth in 2016. The deceleration was largely associated with slower federal Medicaid spending.
