CMS: National health spending up 2.7% in 2021

U.S. spending on health care grew just 2.7% in 2021 as federal expenditures for health care declined after spiking in 2020 due to the COVID-19 pandemic, the Centers for Medicare & Medicaid Services reported today in Health Affairs. The number of uninsured people declined for the second consecutive year as enrollment in coverage through Medicaid and the health insurance marketplaces grew. Despite increased use and intensity of services, spending growth slowed for hospital, physician and clinical services in 2021, but was faster for retail prescription drugs at 7.8%, fueled in part by a shift toward newly available, high-priced brand drugs. The health sector accounted for 18.3% of the economy, down from 19.7% in 2020. 
 
Though the sector’s massive upheaval in 2020 stabilized somewhat in 2021, health care spending in 2020 and 2021 “are inextricably linked to the many unique impacts of the COVID-19 pandemic,” the authors note, adding that current economic trends, including economy-wide inflation, make the outlook for 2022 health care spending uncertain.
 
Hospitals this year experienced massive growth in input costs like labor and supplies driven by a number of factors, including inflation, workforce shortages and supply chain disruptions, according to a recent report by Kaufman Hall.