Earlier this week, CMS actuaries released data as part of the National Health Expenditures (NHE) report. Published annually, the NHE measures total annual spending on healthcare goods and services (e.g., hospital, physician, and prescription drugs), the type of payer (e.g., commercial health insurance, Medicare, and Medicaid), and the type of sponsor (e.g., businesses, households, and federal/state governments).
According to the report, US national healthcare spending slowed in 2021, rising 10.3% compared to 2020. Although this was still an increase, it was lower than the 19.7% increase from 2019 to 2020. Healthcare costs continue to be high, with total health expenditures for 2021 reaching $4.3 trillion and accounting for 18.3% of the US gross domestic product (GDP). In 2021, the federal government reduced its spending on healthcare by 3.5 percent. This decrease was due to a lack of Provider Relief Fund and Paycheck Protection Program (PPP) funds, which had previously been used to provide payroll assistance and cover lost revenue for businesses affected by the pandemic. Additionally, federal public health activity slowed down and there was a lesser increase in the federal portion of Medicaid payments.
CMS reported that, despite a greater utilization of healthcare services and expanded insurance coverage, there was still a decrease in federal spending on healthcare that year. Compared to 2020, spending on hospital and physician services slowed in 2021. Hospital care spending grew by 4.4 percent, resulting in a total of $1.3 trillion, which is lower than the 6.2 percent growth seen in 2020. In comparison to a 6.6 percent growth in 2020, physician and clinician services increased by 5.6 percent in 2021, reaching $864.6 billion. Overall, spending on hospital and physician services reached $2.2 trillion in 2021, a 5.1 percent growth from 2020. Spending on retail prescription drugs was the only goods and services category to experience growth in 2021. According to the report, the cost of medications rose by 7.8 percent to total $378.0 billion – a faster rate of growth than in 2020, when spending increased by 3.7 percent.
In addition, CMS actuaries reported that 2021 saw an increase in prescription drug usage, resulting in a faster rate of spending growth. Conversely, hospital and physician services experienced a marked decrease in expenditures, largely due to slashed federal program funding, such as for COVID-19 aid. Nevertheless, the major payers of hospital and physician services – including Medicare, Medicaid, private health insurance, and out-of-pocket spending – all saw higher spending growth than in 2020.