US Health Care Costs Soar to $4.5 Trillion in 2022, Match Pre-Pandemic Growth
- Health care spending in the U.S rose just over 4% in 2022, hitting $4.5 trillion, according to a report from the Centers for Medicare & Medicaid Services (CMS). This rise in spending marks a return to pre-pandemic trends, with annual growth in spending being less than the 10.6% growth of health spending in 2020, but higher than the 3.2% growth in 2021. The report notes that with this slower growth in spending, health care accounted for 17.3% of the nation’s overall economy in 2022, a decline from the 19.5% share during the first year of the pandemic.
- Spending on prescription drugs increased faster than other segments, accounting for about 9% of total health care spending and totaling $405.9 billion in 2022, an 8.4% increase from 2021. The Biden administration has attempted to control prescription 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 under Medicare. The report also noted that the cost of care rose less sharply in 2022, with the medical price index increasing by 3.2%, while overall inflation hit 7.1%.
- The percentage of Americans with health insurance reached an all-time high of 92% in 2022, due to the pandemic continuous coverage for Medicaid patients and measures that gave more U.S. residents access to health insurance through the health insurance marketplace established under the Affordable Care Act. Medicaid enrollment grew by 6.1 million in 2022, a result of the requirement for continuous Medicaid coverage that Congress enacted in early 2020. Spending on Medicaid saw the largest growth in health care spending at 9.6%, totaling $805.7 billion in 2022, while spending on Medicare was up 5.9%, to $944.3 billion.
US Health Care Spending Grows Amid COVID-19 Pandemic
Health care spending in the U.S saw a moderate increase of 4% in 2022, reaching $4.5 trillion, the federal government stated. This returns to pre-pandemic rates, as indicated by a new report from the Centers for Medicare & Medicaid Services (CMS). The reported growth is substantial, but less than half of the 10.6% hike in health spending during 2020. It exceeded the 3.2% growth in 2021, revealing patterns tied to the COVID-19 pandemic.
The CMS’s annual report on national health care expenses is relied upon by various government bodies, such as the White House Office of Management and Budget, for economic and budgetary projections. Despite slower growth compared to 2020 and 2021, health care comprised 17.3% of the nation’s economy in 2022. This is lower than 19.5% during the first year of the pandemic, the highest ever recorded by the National Health Expenditures Accounts.
Meanwhile, CMS forecasts project health spending to increase by 5.4% per year on average through 2031. By then, health care will constitute a fifth of the nation’s economy.
Notable Increase in Prescription Drug Spending
Prescription drug spending, which makes up about 9% of total health care spending, rose faster than other areas, reaching $405.9 billion in 2022, an 8.4% jump from 2021. The Biden administration has sought to control prescription drug prices. For instance, they proposed measures to reduce the cost of insulin and negotiate lower prices for some Medicare-covered drugs.
The cost of care rose less sharply in 2022, with the medical price index increasing 3.2%, while overall inflation reached 7.1%, the highest in four decades.
Record Number of Americans Insured
CMS reported that 92% of Americans had health insurance in 2022, an all-time high. Medicaid enrollment saw a 6.1 million increase in 2022, due to continuous Medicaid coverage requirements enacted in early 2020. Medicaid had the most significant growth in health care spending at 9.6%, totaling $805.7 billion in 2022. Medicare spending was up by 5.9% to $944.3 billion, with a 1.9% increase in enrollment.
Enrollment through the ACA marketplace rose by 1.7 million and employer-sponsored insurance enrollment by 1.5 million. Out-of-pocket health care spending, excluding health insurance premiums, increased by 6.6%.
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