US healthcare spending grows 9.7%: 7 things to know

Healthcare spending in the U.S. increased 9.7 percent to $4.1 trillion, or $12,530 per person, in 2020, largely driven by an infusion of federal money to respond to the COVID-19 pandemic, according to a CMS analysis published Dec. 15 in Health Affairs.

Seven things to know:

1. The growth rate in 2020 was the largest jump recorded since 2002 and was more than double the 4.3 percent growth in healthcare spending seen in 2019. 

2. CMS said the overall health spending in 2020 was higher for three main reasons: provider assistance programs like the Provider Relief Fund and Paycheck Protection Program; increased federal public health spending; and growth in federal Medicaid payments.

3. The share of the economy devoted to healthcare spending was 19.7 percent in 2020, compared to 17.6 percent in 2019. 

4. Hospital spending grew 6.4 percent, reaching $1.3 trillion in 2020. The growth reflected COVID-19 relief funding and faster increases in Medicaid spending for hospital care. Hospital prices also increased 3.2 percent in 2020 compared to 2 percent in 2019.

5. Physician and clinical services spending grew 5.4 percent and reached $809.5 billion in 2020. 

6. Retail physician drug expenditures reached $348.4 billion in 2020, representing 3 percent growth. 

7. "The substantial growth in healthcare spending was the largest since 2002 and driven by the unprecedented government response to the global pandemic," said Micah Hartman, a statistician in the CMS Office of the Actuary and first author of the article. "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."

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