THE OUTLOOK FOR HEALTH CARE IN 2023:

What you need to know about the forces reshaping our industry.

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March 29, 2022

How much will the US spend on health care over the next decade?

Daily Briefing

    Health care spending in the United States is projected to have grown 4.2% in 2021, down from 9.7% growth in 2020, and health care prices are expected to rise 3.6% in 2022, according to a recent report from CMS' Office of the Actuary, published in Health Affairs.

    Health care spending in 2021

    According to the report, health care spending in the United States grew to $4.3 trillion in 2021, and spending associated with public health activities like vaccinations and disease prevention programs is projected to have dropped 5.2% in 2021 to $212.1 billion.

    The largest increase in spending came from hospital-related services, which accounted for more than 31%—or $1.3 trillion—of health care spending in 2021. In addition, pharmaceutical spending increased 4.7% in 2021, up from 3% in 2020.

    The report projected that Medicaid spending grew to 10.4% in 2021, an increase from 9.2% in 2020, and growth in Medicaid enrollment is expected to have hit 8.2% in 2021, compared with 5.1% in 2020.

    Meanwhile, Medicare spending is projected to have increased 11.3% in 2021, according to the report, but it notes that Medicare spending should see lower projected growth rates in 2022.

    In total, the slower growth in national health expenditures in 2021, coupled with growth in gross domestic product (GDP) that rebounded to 9.6%, resulted in an expected 0.9-percentage-point decline in the projected health share of the GDP to 18.8%.

    Projections for 2022 and beyond

    Going forward, the report projects that U.S. health care spending will grow at an average of 4.9% per year from 2022 to 2024 and then 5.3% per year beyond that, hitting $6.8 trillion in 2030. In addition, the report projects that health care prices will increase 3.6% in 2022 while out-of-pocket costs will rise 6.1% and continue to rise an average of 4.6% each year through 2030.

    Hospital spending growth is projected to grow 6.9% in 2022, an increase from 5.7% in 2021. By 2030, the report projects the spending share of hospital-related services to increase almost 33%.

    In addition, physician services spending is projected to increase 6.2% in 2022 to $903 billion, up from 5.1% in 2021, and retail prescription spending is expected to rise 4.3% in 2022 to $380 billion.

    The percentage of the U.S. population with health insurance is projected to hit a peak of 91.1% in 2022 and then drop once the public health emergency ends, hitting 90.5% in 2030, according to John Poisal, deputy director of the National Health Statistics Group.

    "Our expectation is spending on federal healthcare programs will begin to normalize and decline from all-time highs in 2020," Poisal said.

    However, the authors of the report note the projections assume the public health emergency in the United States ends this year and that the effects of the pandemic continue to wane.

    "[T]his outlook is contingent on a virus that has evolved and surprised at every turn—and could do so again," the authors wrote. (Armour, Wall Street Journal, 3/28; Kacik, Modern Healthcare, 3/28; Cheney, HealthLeaders Media, 3/28; Frieden, MedPage Today, 3/28; Reed, Axios, 3/29)

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