National long-term care spending hits all-time high at $163 billion

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Americans spent nearly $163 billion on nursing care facilities and continuing care retirement communities in 2016, according to a new federal report.

The Centers for Medicare & Medicaid Services' National Health Care Spending report for 2016, published Wednesday in Health Affairs, found that total healthcare spending in the United States increased 4.3% in 2016, reaching $3.3 trillion.

When it comes to long-term care, $162.7 billion was spent last calendar year. That marks the highest point in total nursing care and CCRC spending to date, compared to $140.5 billion in 2010. The annual growth rate for nursing care facilities and CCRCs hit 2.9% for 2016, down from 3.7% the prior year.

All Medicaid-related goods and services experienced slower growth in 2016 than in previous year, save for nursing homes and CCRCs, according to the report. Total Medicaid expenditures for 2016 increased 3.9% to reach $565.5 billion. In total, Medicaid spending made up 17% of the nation's total health expenditures for last year.

Medicare spending made up 20% of total healthcare spending in 2016, at $672.1 billion. Medicare fee-for-service spending growth slowed down in 2016, due in part to declines in spending on nursing home, the report found. That drop in Medicare spending for long-term care was driven by a lower use of services and a smaller increase in the Medicare reimbursement rate.

The overall slower growth of healthcare spending in the U.S. in 2016 is likely due to a deceleration of the “major changes” experienced by the industry in previous years, such as provisions of the Affordable Care Act that expanded insurance options. For that reason, 2016 may mark “a return to the more typical relationship between annual rates of growth in healthcare spending and growth in nominal GDP,” researchers wrote.

A recent report from Health Affairs projected long-term care spending to continue to climb over the next decade, driven by the rapidly aging U.S. population. That report predicted that nursing facilities and CCRC spending would grow at an average rate of 5.2% per year until 2024, reaching $274 billion in total spending.