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Healthcare spending grew 2.7% to reach $4.3 trillion in 2021 

  • Healthcare spending in 2021 was slower than in 2020, with a 2.7% increase percent.   
  • The report added that in 2021 the number of uninsured people declined for the second consecutive year.
  • The article also stated that hospital service utilization increased significantly as pandemic restrictions were lifted.  

US healthcare spending grew 2.7 percent to $4.3 trillion in 2021. This is much slower than the increase of 10.3 percent seen in 2020. According to a Health Affairs study, the slower growth rate in 2021 was driven by a 3.5% decline in federal government expenditures for healthcare after a spike in 2020. This spike primarily occurred in response to the COVID-19 pandemic.   

This new CMS analysis also stated that “three key factors affected the spending trend in2 2021, with the decline in federal government healthcare spending far outweighing greater use of healthcare goods and services and increased insurance coverage”.   

The report added that in 2021 the number of uninsured people declined for the second consecutive year. This number dropped from 31.2 million to 28.5 million. The portion of the population that has insurance Medicaid enrollment grew by 8.5 million, or 11.2%, the most since 2015. Medicare and private insurance enrollment increased by 1.7% and 0.3%, respectively.  

Here are some other healthcare spending aspects included in this report:  

  • The health sector’s share of the economy fell from 19.7% in 2020 to 18.3% in 2021 but was still higher than the 17.6% share in 2019.   
  • Out-of-pocket spending saw a 10.4% spike in 2021, its fastest growth rate since 1985.   
  • Medicaid enrollment grew by 11.2 percent. This is the most significant jump since 2015.  
  • The growth rate was markedly slower than 2020’s healthcare spending growth of 10.3 percent—the 38-year-high of 10.7 percent nominal GDP (Gross Domestic Product) growth over the same period.   
  • After a 36.8 percent growth in 2022, federal healthcare spending fell 3.5% in 2021. Lower federal spending for the public health emergency (PHE) and COVID-19 programs were the most significant contributors to slower growth in healthcare spending in 2021.   

Another report finding was that hospital spending increased by 4.4 percent to $1.3 trillion in 2021. “The mix of spending on drugs dispensed also contributed to increased expenditure growth, as spending for newly available, higher-price brand-name medications increased and less was spent on newly available generic medicines,” the report added.  

Also, hospital service utilization increased significantly as pandemic restrictions were lifted. Aligned with that, spending on physician and clinical services grew 5.6%.  

Read the complete article here: National Health Care Spending In 2021: Decline In Federal Spending Outweighs Greater Use Of Health Care

Stay tuned for this and more industry news through our January 2023 newsletter. Subscribe to our monthly newsletter and our Health Prime blog for ongoing leading industry medical practice articles and policy updates.      

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