U.S. healthcare spending witnessed a large increase in 2022, growing by 4.1% to reach a staggering $4.5 trillion, or $13,493 per person. This escalation in healthcare expenditure, outlined in a comprehensive analysis by the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS) and published in Health Affairs, reflects a several factors influenced by the ongoing effects of the COVID-19 pandemic and shifting patterns in healthcare financing and utilization. A big contributor to this increase was growth in Medicaid and private health insurance spending. This was however, affected by a continued decline in supplemental funding from the federal government, a part of the COVID-19 pandemic response. The rate of growth in 2022, though more than the 3.2% observed in 2021, was slower than the 10.6% surge in 2020. An important observation from the report is that despite this increase in healthcare spending, its growth was considerably slower than the nominal gross domestic product (GDP), which rose by 9.1%. The proportion of the economy devoted to healthcare spending decreased to 17.3% in 2022, down from the historical peak of 19.5% in 2020.
Analyzing the components of this growth, the slowdown in personal healthcare spending, regarding goods and services, was more than offset by an acceleration in non-personal healthcare spending. This shift was driven by a turnaround in the net cost of insurance. Personal healthcare spending decelerated due to reduced spending growth in hospital care, dental services, and physician and clinical services. Medicaid spending increased by 9.6% in 2022, continuing its upward trajectory from previous years. This growth was mainly caused by a rise in enrollment, which accounted for most of the increase. Private health insurance spending also saw an uptick of 5.9% in 2022, following a 6.3% rise in 2021 and a decline of 0.8% in 2020.
Micah Hartman, a statistician in the CMS Office of the Actuary and the first author of the Health Affairs article, noted that healthcare expenditures since 2020 have reflected volatile patterns associated with the COVID-19 pandemic and the federal government’s response to the public health emergency. The growth in 2022, aligning more closely with the pre-pandemic annual growth rate of 4.4% over 2016-19, indicates a return to a semblance of normalcy. It remains uncertain how future healthcare spending trends will evolve, especially considering factors such as medical-specific price inflation, the utilization and intensity of medical care, and demographic impacts associated with the aging population.
Another feature of the report is the decrease in the number of uninsured individuals for the third consecutive year, dropping from 28.5 million in 2021 to 26.6 million in 2022. This reduction led to an increase in the insured share of the population to 92.0%, a historic high. The rise in Marketplace enrollment by 1.7 million people and employer-sponsored insurance enrollment by 1.5 million people contributed to this trend. Medicaid enrolment saw an increase of 6.1 million people in 2022. At least 11,967,000 Medicaid enrollees have been disenrolled as of December 7, 2023, according to the most current data.The expenditure on retail prescription drugs reached $405.9 billion in 2022, accounting for 9% of overall health spending. The growth in this segment was quicker than in previous years, driven by factors like increased utilization, price hikes, and shifts in the mix of drugs purchased.
