US health care spending to grow to $4.5 trillion in 2022; a return to pre-pandemic growth rates

After a sharp jump in the first year of the COVID-19 pandemic and then a softening nearly as dramatic a year later, U.S. health care spending will grow by just over 4 percent in 2022, reaching $4.5 trillion, the federal government said in Wednesday.

Annual growth in national health care spending appears to be returning to pre-pandemic trends, according to a new report from analysts at the Centers for Medicare & Medicaid Services (CMS). The report was published online Wednesday in the journal Health Affairs.

In the four years before 2020, the first year of the COVID-19 pandemic, health care costs increased by 4.2% to 4.6% annually, according to CMS.

While last year’s increase was higher than the 3.2 percent growth in health care spending in 2021, it was less than half of the 10.6 percent growth in health care spending in 2020.

“This pattern reflects the volatility associated with the COVID 19 pandemic and the federal government’s significant response,” CMS statistician Micah Hartman said at a press briefing on the report.

CMS produces the annual National Health Expenditure Report, which various government agencies, including the White House Office of Management and Budget, rely on as they prepare economic and budget projections and plans.

With spending growth slower than in 2020 and 2021, health care accounts for 17.3% of the nation’s total economy in 2022. That’s down from the first year of the pandemic, at 19.5%, the highest share ever recorded by the National Health Spending Accounts.

In 2020, national health care spending “accelerated significantly primarily due to unprecedented additional funding for COVID-19 and public health spending,” Hartman said. “The result was that the share of GDP devoted to health reached 19.5% in 2020.”

The 2022 findings repeat the pre-pandemic picture from 2016 to 2019, when healthcare’s share of the economy fluctuated between 17.4% and 17.6%.

The current trend is less dramatic than CMS’s longer-term projections, which project health care spending to grow an average of 5.4 percent annually through 2031 and account for one-fifth of the nation’s economy by then.

Higher drug costs

Prescription drug spending — about 9 percent of total health care spending — is growing faster than other segments. Retail drug spending will total $405.9 billion in 2022 — an 8.4% increase from 2021, following a 6.8% increase from 2020.

The Biden administration has tried to curb prescription drug prices through the Inflation Reduction Act, which includes provisions to reduce the cost of monthly insulin and negotiate lower drug prices for certain drugs covered by Medicare. Last week, Biden said the administration could infringe on the patents on drugs made with taxpayer money if their costs are too expensive.

As overall health care spending rose modestly, the cost of care — how much patients and their insurers, public or private, pay for the care they receive — rose less sharply in 2022. The Medical Price Index increased by 3, 2 percent, according to the report, while that year headline inflation reached 7.1 percent, a level not seen in four decades.

Secured at the highest level ever

The percentage of Americans with health insurance will reach an all-time high of 92 percent in 2022, CMS said. That’s due both to continued pandemic coverage for Medicaid patients and to measures that gave more U.S. residents access to health insurance through the health insurance marketplace created under the Affordable Care Act, said Aaron Catlin, deputy director of the CMS National Statistics Group. .

Medicaid enrollment grew by 6.1 million in 2022 as a result of the requirement for continuous Medicaid coverage that Congress passed in early 2020, CMS Economist Ann Martin said. That requirement ended earlier this year, and Medicaid programs are in the process of “rolling back” by requiring enrollees to establish eligibility for the program.

Medicaid saw the largest increase in health care spending, 9.6 percent, to a total of $805.7 billion in 2022. Medicare spending increased 5.9 percent, to $944.3 billion in 2022, it said Martin, while Medicare enrollment rose 1.9%.

Enrollment through the ACA marketplace increased by 1.7 million, and enrollment in employer-sponsored insurance increased by 1.5 million. The 1.5 percent increase in private insurance coverage in 2022 marks “the fastest growth and enrollment since 2015,” Martin said.

Subsidies on premiums for individual insurance purchased through the ACA marketplace, first introduced under the American Savings Act and later expanded in the Inflation Reduction Act of 2022, helped boost enrollment in marketplace plans. Kathleen said.

Private health insurance and Medicare saw spending increase by 5.9%. Consumers’ out-of-pocket health care spending, which includes co-pays and other forms of unreimbursed medical expenses but not health insurance premiums, rose 6.6%.


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