Report: Health spending falls for first time in 60 years

U.S. spending on health care declined for the first time in 60 years in first-quarter 2022, falling 1.7% year over year as health care prices fell relative to inflation, according to a report released today by Altarum. As a share of gross domestic product, health care spending fell from 20% in mid-2020 to 18% in May 2022.

“[W]e expect that when final CMS national health expenditure data are released for 2021 and 2022 that they will likely show a meaningful dip in the real long-term health care cost trend, at least temporarily alleviating some of the spending pressures that occurred in 2020 due to the COVID-19 pandemic,” the report states.

This inflation-adjusted reduction occurred while economy-wide inflation reached 40-year highs, which also has tremendous impacts on hospital input costs. According to a recent AHA report, hospitals have experienced surging costs for labor, drugs, supplies, equipment and other resources required to care for patients since the start of the COVID-19 pandemic. For example, labor expenses per patient rose 19.1% between 2019 and 2021, with travel nurse costs surging to a median 39% of nurse labor expenses by January 2022. Supply costs rose 21% per patient overall, with median drug costs up 37% per patient and intensive care unit medical supply costs up 32% per patient.