Back to normal? Healthcare spending growth rates down from pandemic era

The healthcare spending rate has increased 4.1% in 2022 to $4.5 trillion, or $13,493 per person, according to a new report from the Centers for Medicare & Medicaid Services published in Health Affairs.

While already previously revealed by CMS in June, the analysis sheds new light on how, and why, health care spending changed in the U.S. last year.

Notably, the number of uninsured individuals has declined for three straight years with the insured population rate reaching 92%, or 26.6 million individuals uninsured.

“Health care expenditures since 2020 have reflected volatile patterns associated with the COVID-19 pandemic and the federal government’s response to the public health emergency,” said Micah Hartman, a statistician in the CMS Office of the Actuary and first author of the Health Affairs article, in a statement. “The growth in health care spending in 2022 of 4.1% was more consistent with the pre-pandemic average annual growth rate of 4.4% over 2016 to 2019. It remains to be seen how future health care spending trends will materialize, as trends are expected to be driven more by health-specific factors such as medical-specific price inflation, the utilization and intensity of medical care and the demographic impacts associated with the continuing enrollment of the baby boomers in Medicare.”

For payers, Medicaid spending increased 9.6% in 2022, followed by out-of-pocket spending at 6.6% and Medicare and private health insurance spending clocking in at 5.9% growth. Private health insurance spending remained the bulk national health care expenditures as it reached $1.3 trillion, accounting 29% of total health expenses. The growth rate was slower than in 2021, due to less demand for elective surgeries that were completed in 2021 after they had been delayed during the COVID-19 pandemic.

The out-of-pocket growth rate decreased from 11% in 2021 after less growth for dental services, durable medical equipment and physician and clinical services, according to the report.

As for goods and services, prescription drug spending grew the most in 2022 at 8.4% reaching $405 billion. Physician and clinical services increased 2.7%, while hospital spending increased 2.2%. The slow hospital spending growth rate “reflected a decrease in hospital care spending by private health insurance, Medicare and Medicaid.” Hospital spending reached $1.4 trillion in 2022.

The 2022 health care spending growth rate was faster than the 3.2% growth recorded in 2021. In 2020, the growth rate was a staggering 10.6%.