After skyrocketing in the first year of the COVID-19 pandemic and then stalling almost dramatically a year later, US health care spending will increase just over 4% in 2022, reaching $4.5 trillion, the federal government said.
Annual growth in the nation’s health care spending appears to be returning to pre-pandemic trends, according to a new report from analysts at the Centers for Medicare and Medicaid Services, or CMS. The report was published online in the journal Health Affairs.
In the four years before 2020, the first year of the COVID-19 pandemic, health care spending increased 4.2% to 4.6% a year, according to CMS.
While last year’s increase is higher than the 3.2% growth in health spending in 2021, it is less than half of the 10.6% growth in health spending in 2020.
This pattern reflects the volatility associated with the COVID 19 pandemic and the federal government’s significant response, said Micah Hartman, a CMS statistician at a briefing for reporters on the report.
CMS produces an annual report on the nation’s health care expenditures, which various government agencies, including the White House’s Office of Management and Budget rely on as they develop economic and budget forecasts and plans.
With slower growth in spending compared to 2020 and 2021, health care will account for 17.3% of the countries’ total economy in 2022. That’s a drop from the first year of the pandemic, at 19.5%, the highest share that recorded by the National Health Expenditure Accounts.
In 2020, national health spending accelerated significantly due to unprecedented COVID-19 supplemental funding and public health spending, Hartman said. The result is that the share of GDP devoted to health reached 19.5% in 2020.
The findings in 2022 reflect the pre-pandemic picture from 2016 to 2019, when the share of healthcare in the economy reached between 17.4% and 17.6%.
The current trend is less dramatic than long-term CMSforecasts, which show health care spending to grow 5.4% a year on average until 2031 and to take one-fifth of the countries economy by then.
Higher spending on drugs
Spending on prescription drugs is about 9% of total health care spending has increased faster than other segments. Retail spending on drugs will reach $405.9 billion in 2022, an 8.4% increase from 2021, after growing 6.8% from 2020.
The Biden administration tried to crack down on over-the-counter drug prices through the Inflation Reduction Act, which includes provisions to reduce the cost of monthly insulin and negotiate lower drug prices for some drugs covered in under Medicare. And last week, Biden said the administration could revoke patents on drugs made with taxpayer money if their costs are too high.
While overall health care spending increased slightly, the cost of care—how much patients and their insurance providers, public or private, pay for the care they receive—increased slightly in 2022. The index of medical prices increased by 3.2%, according to the report , while overall inflation in the same year reached 7.1%, a rate not seen in four decades.
Insured at an all-time high
The percentage of Americans with health insurance will peak at 92% in 2022, CMS reported. That’s because of both continued pandemic coverage for Medicaid patients as well as measures that gave more US residents access to health insurance through the health insurance marketplace established under the Affordable Care Act, said Aaron Catlin, deputy director of the CMS national statistics group. .
Medicaid enrollment will grow by 6.1 million in 2022, a result of the requirement for continuous Medicaid coverage enacted by Congress in early 2020, CMS economist Anne Martin said. That requirement ended earlier this year and Medicaid programs are in the process of moving away from requiring enrollees to establish their eligibility for the program.
Medicaid sees the single largest growth in health care spending at 9.6% to total $805.7 billion in 2022. Medicare spending is up 5.9%, to $944.3 billion, in 2022, Martin said, while enrollment in Medicare increased by 1.9%.
Enrollment through the ACA marketplace increased by 1.7 million and employer-sponsored insurance enrollment increased by 1.5 million. The 1.5% increase in private insurance coverage by 2022 marks the fastest growth and enrollment since 2015, Martin said.
Subsidies on premiums for individual insurance purchased through the ACA marketplace, first put in place under the American Rescue Plan Act and later extended in the 2022 Inflation Reduction Act have helped drive stronger enrollment in the marketplaces plan, Catlin said.
Private health insurance and Medicare saw spending increase by 5.9%. Increased by 6.6%.
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