U.S. spending on health care grew 9.7% in 2020, up from 4.3% in 2019, the Centers for Medicare & Medicaid Services reported today in Health Affairs. According to CMS, the 2020 spending growth was largely driven by a 36% increase in federal spending, including: COVID-19 provider assistance programs, in particular the Provider Relief Fund and Paycheck Protection Program to make up for lost revenue and increased costs resulting from the pandemic; increased federal public health spending, including spending for vaccine development through Operation Warp Speed; and growth in federal Medicaid payments due to faster enrollment growth and a 6.2-percentage-point increase in the federal medical assistance percentage. Hospital spending growth was relatively flat at 6.4% in 2020 compared to 6.3% in 2019, and was driven largely by federal spending.
CMS also found that the number of people without health insurance decreased by 600,000 in 2020 to 31.2 million, noting that where people get coverage also changed. Medicaid and marketplace enrollment grew by 4.3 million, while commercial coverage declined by 1.7 million.
“The substantial growth in health care spending was the largest since 2002 and driven by the unprecedented government response to the global pandemic,” said lead author Micah Hartman, a statistician in the CMS Office of the Actuary. “Federal spending increased rapidly in 2020 as the government increased public health spending to combat the pandemic and provided significant assistance to health care providers.”