2022 National Healthcare Spending Growth Slowed to Pre-COVID Levels

In 2022, national health expenditures hit $4.5 trillion, a 4.1 percent increase, with a couple of key spending areas seeing growth rates return to pre-pandemic levels, CMS announced in a fact sheet.

Healthcare spending as a share of the gross domestic product (GDP) dropped to 17.3 percent, which is below the average for the three years before the COVID-19 pandemic (17.5 percent).

The growth rate was heavily influenced by spending in Medicaid and the private payer space. However, decreased federal spending on pandemic-era initiatives helped rein in spending growth. Federal spending on COVID-19 initiatives declined to $2.0 billion.

Over nine out of ten Americans have health insurance, a historic coverage rate (92 percent), leaving 26.6 million individuals uninsured. Medicaid added 6.1 million enrollees and private health plans brought in 2.9 million more Americans.

Private payers covered $1.3 trillion of the nation’s healthcare spending, the highest share across all payers (29 percent). It represented a 5.9 percent growth in expenditures for this sector, a decline from 6.3 percent growth in 2021. Medicare covered 21 percent of spending, Medicaid covered 18 percent, and 11 percent was covered out-of-pocket.

Household healthcare spending remained stable, growing 6.9 percent in 2022 following a 6.8 percent growth in 2021.

Hospital care absorbed the highest share of healthcare spending at 30 percent, a 2.2 percent growth. Although its overall share was high, the growth rate slowed. In 2021, this corner of the industry saw a 4.5 percent growth rate.

“Slower growth in hospital prices and a decline in hospital days and discharges contributed to the lower growth in 2022,” the fact sheet explained.

The physician and clinical services sector contributed the second-highest share of healthcare spending (20 percent). Accounting for one-fifth of the nation’s overall spending on healthcare, the sector nonetheless also saw a decrease in the pace of growth. All of the major payers—public and private—experienced a check in the spending growth rate for these services.

The remaining sectors were responsible for single-digit shares of the spending. Unlike the previous sectors, the following areas of healthcare spending experienced an uptick in their spending growth rate.

Retail prescription drugs accounted for 9 percent with a growth rate of 8.4 percent. The previous year, spending grew by 6.8 percent. Drug prices grew by 1.2 percent and the number of prescriptions dispensed also grew, driving this increase.

Medical services provided in non-traditional settings, such as home healthcare, accounted for 6 percent of spending. The sector experienced a 9.7 percent growth rate. The previous year, spending on medical care in non-traditional settings grew 6.7 percent.

Nursing care facilities and continuing care retirement communities contributed 4 percent of the nation’s healthcare spending. In 2021, spending in these areas dropped 7.8 percent. But in 2022, this area saw a growth rate of 5.6 percent, hitting $191.3 billion. Most of this spending came from public payers and out-of-pocket spending.