a dissertation health affairs go through Martin, Hartman, Benson, Catlin and the National Health Expenditure Accounts Team (2022) National health expenditure (NHE) was found to have increased but decreased as a share of gross domestic product (GDP).
Health care spending in the US will grow 2.7% in 2021 to $4.3 trillion, well below the 10.3% increase in 2020. The slowdown in growth in 2021 is due to a 3.5% decline in federal government spending on health care following a peak in 2020, largely in response to the COVID-19 pandemic. Along with this decline, use of medical products and services increased in 2021. The health sector’s share of the economy fell from 19.7% in 2020 to 18.3% in 2021, but was still up from 17.6% in 2019.
For those without access, a blog post summarizing the findings here Also reported elsewhere here. As mentioned above, the decline in healthcare costs (as a percent of GDP) was largely due to lower COVID-19 spending and a growing economy.
Digging down for more details, we find that institutional services account for the largest share of healthcare spending. Specifically, hospital care accounted for 31 percent of costs, the broad “other” category 23 percent, physician services 20 percent, and prescription drugs 9 percent. Administrative costs from government and health insurers account for 7% of costs Higher by international standards.
How does health care spending vary by insurance type? Healthcare Dive Report:
Private health insurance grew by 5.8% in 2021 and remains the largest share of total health spending by payer type at 28%.
Medicare spending rose 8.4%, while Medicaid spending was largely steady at 9.2% year-over-year.
Out-of-pocket costs rose 10.4%, the fastest pace since 1985, as consumers spent more on dental services and durable medical equipment, the analysis showed.
While a decline in health care spending as a share of GDP might be considered a good thing, it is unclear whether this trend is sustainable given the post-COVID adjustment in the health care sector and the broader economy. It will be interesting to see whether healthcare spending falls again in 2022, possibly as government reimbursement rates lag broader inflation. However, data for 2022 has not yet been released.
