Health Spending Rose 4.1% in 2022, Government Report Says

Derick Alison
Derick Alison
6 Min Read

Health spending in the U.S. rose by 4.1% — to $4.5 trillion — in 2022, up from a 3.2% increase in 2021 but not as much as the 10.6% growth seen in 2020, the Centers for Medicare & Medicaid Services (CMS) announced Wednesday.

The lower growth in 2021 and 2022 compared with 2020 was largely due to the gradual disappearance of COVID-19-related federal spending that had occurred in 2020 in response to the pandemic, Anne Martin, of the National Health Statistics Group in the CMS Office of the Actuary, said during a reporter briefing Wednesday sponsored by Health Affairs, which also published the CMS report.

A total of 83% of the national health expenditure was on personal healthcare goods and services, followed by the net cost of health insurance — defined as the revenue collected by health insurers minus the amount paid out in health benefits — at 6%, and public health activity and healthcare investment, both at 5%. Government administration costs took up the remaining 1%, the authors said.

Looking more specifically at how the money was spent, 30% of overall healthcare dollars went to hospital care, followed by 23% on “other spending” — including dental services, home health services, and durable medical equipment — and then physician and clinical services at 20% and prescription drugs at 9%, Martin said.

In the physician and clinical services category, spending in 2022 totaled $884.9 billion, an increase of 2.7% from the year before but a slower rate of growth than the 5.3% increase in 2021, Martin said. Factors contributing to the slowing of the rate of increase included slower spending growth in this category by Medicare, Medicaid, and patients spending out of pocket, as well as a slowdown in the growth in prices.

“So in physician services, the number one contributor to the deceleration was Medicare, which decelerated from 13% growth in 2021 to 6.8% growth in 2022,” Martin told MedPage Today during a question-and-answer session. “But among all of the major payers, spending growth slowed down. A lot of that has to do with a slower growth in utilization coming off the rebound of increased service use in 2021, which followed the dip in 2020” during the height of the COVID-19 pandemic.

This category also includes spending for independent laboratory tests, noted Aaron Catlin, deputy director of the National Health Statistics Group. “That showed slower growth as well and pulled down that growth rate, due to a lower amount of COVID testing in 2022,” he said.

Retail prescription drug spending rose 8.4% in 2022, compared with 6.8% in 2021 and 4.4% in 2020, Martin said. Growth in prescription spending increased for Medicare and the out-of-pocket category, and there was strong growth in Medicaid spending here as well. In addition, prices for prescription drugs increased by 1.2% after 4 years of declines.

Where did the money spent on healthcare come from? Nearly three-quarters — 72% — came from health insurers, including Medicare, Medicaid, private health insurance, and other government payers such as the Department of Veterans Affairs, the Department of Defense, and the Children’s Health Insurance Program. Another 11% came in the form of out-of-pocket spending, while 8% came from other third-party payers and programs, such as Workers’ Compensation, school health programs, and the Indian Health Service.

For specific types of insurance, Medicare spending totaled $944.3 billion in 2022, an increase of 5.9%, partly due to an increase in Medicare enrollment of nearly 2%, according to Martin. However, per-enrollee spending dropped 3.8%, largely due to slower growth in spending on hospital care and physician and clinical services. Medicare spending was divided equally between beneficiaries enrolled in fee-for-service Medicare and those enrolled in Medicare Advantage plans, which are run by private health insurers.

Total spending on Medicaid was lower than for Medicare, at $805.7 billion; spending on that program increased by nearly 10%, representing a third year of steady growth, Martin said. Enrollment growth in 2022 remained strong at 7.2%.

The number of uninsured people dropped for the third consecutive year, Hartman noted, going from 31.8 million in 2019 to 31.2 million in 2020, and then 28.5 million in 2021 and 26.6 million in 2022. Similarly, the insured share of the population gradually rose, from 90.3% in 2019 to 92.0% in 2022. Most of the increase was from more people buying insurance in the Affordable Care Act marketplaces and more signing up for employer-sponsored insurance, he said.

The share of healthcare as a percentage of the Gross Domestic Product (GDP) was 17.3% last year, down from a peak of 19.5% in 2020; however, last year’s number is consistent with the average share of 17.5% during the years 2016-2019, Micah Hartman, also of the National Health Statistics Group at CMS, said during the briefing.

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    Joyce Frieden oversees MedPage Today’s Washington coverage, including stories about Congress, the White House, the Supreme Court, healthcare trade associations, and federal agencies. She has 35 years of experience covering health policy. Follow

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