US Health Care Spending Soars to $4.5 Trillion in 2022: A Back to Pre-Pandemic Growth
TL/DR –
In 2022, health care spending in the US rose by just over 4%, reaching $4.5 trillion, reflecting a return to pre-pandemic trends, according to the Centers for Medicare & Medicaid Services. Spending on prescription drugs, which constituted around 9% of the total, increased by 8.4% from 2021, with the Biden administration introducing measures to regulate prices. Meanwhile, the percentage of insured Americans reached a record high of 92%, propelled by pandemic-related coverage for Medicaid patients and greater access to insurance via the marketplace created under the Affordable Care Act.
U.S Health Care Spending in 2022
U.S health care spending rose by over 4% in 2022, totalling $4.5 trillion, as reported by the federal government. This displays a return to pre-pandemic growth levels, according to a recent report from the Centers for Medicare & Medicaid Services (CMS). Pre-pandemic growth in health care spending, from 2016 to 2019, averaged between 4.2% and 4.6% annually.
Last year’s increase was higher than the 3.2% growth witnessed in 2021, but still significantly lower than the 10.6% growth seen in 2020 at the outbreak of the COVID-19 pandemic. CMS stated that this fluctuation exemplifies the unpredictability associated with the pandemic and the consequential governmental action.
As the rate of health care spending growth slowed compared to 2020 and 2021, health care represented 17.3% of the U.S economy in 2022, a decline from the 19.5% recorded during the first year of the pandemic. According to CMS, national health expenditures in 2020 surged due to COVID-19 related spending and public health expenditure.
Rising Prescription Drug Spending
Prescription drug spending, accounting for 9% of total health care expenditure, grew faster than other sectors. Retail spending on medication reached $405.9 billion in 2022, an 8.4% increase from the previous year. In response, the Biden administration has made efforts to control prescription drug prices through the Inflation Reduction Act. This includes provisions to reduce insulin costs and negotiate lower prices for some Medicare drugs.
Record Health Insurance Coverage
The proportion of Americans with health insurance in 2022 reached a record 92%, according to CMS. This was due to continuous coverage for Medicaid patients during the pandemic and increased access to health insurance through the Affordable Care Act. Medicaid enrollment grew by 6.1 million, mainly due to the continuous Medicaid coverage requirement introduced in early 2020.
Health care spending in Medicaid saw the largest growth of 9.6%, reaching $805.7 billion in 2022. Medicare spending and enrollment also increased, by 5.9% and 1.9% respectively. At the same time, enrollment in the ACA marketplace and employer-sponsored insurance rose by 1.7 million and 1.5 million respectively. Private health insurance and Medicare spending each grew by 5.9%, while out-of-pocket health care expenditure increased by 6.6% in 2022.
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