US health spending hits $4.5 trillion: Health insurance shows historic 92% coverage

US health spending hits $4.5 trillion
US health spending hits $4.5 trillion

United States: In the United States, healthcare spending has risen to $4.5 trillion in 2022, as per US Centers for Medicare & Medicaid Services (CMS) report published on Wednesday.

Healthcare spending rose 4.1 percent last year, a rate that officials said indicated a return to pre-pandemic patterns after two years of volatility. Spending on healthcare surged 10.6 percent in 2020 and then declined dramatically to 3.2 percent in the following year, according to the reports by news agency Reuters.

Micah Hartman, a statistician at the CMS’s official of the Actuary said, “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”.

As per the data from the US Centers for Medicare and Medicaid Services (CMS), the growth was attributed to spending on Medicaid and private health insurance, in which the insured share of the population rose to a historic high of 92 percent.

US Centers for Medicare and Medicaid Services | Credits: Getty Images

The number of uninsured individuals declined for the third straight year to 26.6 million from 28.5 million in 2021.

Factors contributed to the spending surge

The non-personal expenses accelerated, pushed by a turnaround in the net cost of insurance, whereas personal healthcare spending on hospital care, prescription drugs, dental, clinical, and physician services slowed down in the year.

Hospital services: As per the report from Medical Economics, hospital care hit $1.4 trillion, accounting for 30 percent of all healthcare spending. However, the 2022 growth rate of 2.2 percent was lower than the 4.5 percent rise in 2021, according to CMS.

The CMS report stated, “The slower growth in 2022 reflected a slowdown in spending for hospital care by private health insurance, Medicare, and Medicaid and by a decline in other private revenues,” according to Reuters.

Prescription drugs: Amounting to about 9 percent of all health care spending, retail prescription drugs have risen by 8.4 percent to $405.9 billion in 2022. This increase was more than 6.8 percent in 2021, including more Medicare and out-of-pocket spending but slower growth in Medicaid and private health insurance for prescription drugs.

The report said, “The faster growth in 2022 was influenced by faster growth in the number of prescriptions dispensed and an increase in retail prescription drug prices (1.2% in 2022) after four consecutive years of decline”.

Health insurance: As per the CMS report, with 92 percent of the population covered, health insurance hit a record high in 2022, Medical Economics reported.

Medicaid enrollment rose by 6.1 million last year while private health insurance enrollment grew by 2.9 million people.

Healthcare component in GDP In 2022, it was 17.3 percent of the 2022 national GDP as compared to 18.2 percent share in 2021. It is to be noted that the health spending as a proportion of the US gross domestic product (GDP) decreased in 2022.