U.S. healthcare spending rose 9.7% to $4.1 trillion last year, primarily due to federal COVID-19 relief spending, the actuaries at the Centers for Medicare and Medicaid Services reported Wednesday.
The jump marks the largest growth in health expenditures since 2002 and spending was more than 5% higher than during 2019. Much of the increase came from federal spending related to the COVID-19 pandemic, such as the Provider Relief Fund and Paycheck Protection Program loans, according to a report the CMS Office of the Actuary published in Health Affairs.
Health spending constituted 19.7% of gross domestic product. The spike in that share last year is the largest annual increase agency actuaries ever recorded, CMS statistician Micah Hartman said during a news briefing.
But when spending related to public health and related federal programs is excluded, national health expenditures grew only 1.9%, largely because many people cut back on healthcare utilization during the start of the pandemic.
Hospital, physician and prescription drug spending all increased. Hospital spending, which amounted to $1.3 trillion and 31% of all healthcare spending, saw similar growth to 2019. Last year, the increase was due entirely to supplemental federal funding related to the pandemic. While out-of-pocket spending on hospital care decreased 12.6%, prices increased 3.2%, compared to 2% in 2019, CMS found.
Federal healthcare spending increased 36% driving by public health and Medicaid expenditures.
The Provider Relief Fund made up $121.6 billion of federal health expenses and Paycheck Protection Program loans accounted for $53.3 billion. Nearly $87 billion went to hospitals, with physicians and clinical services and nursing homes receiving an additional $51.5 billion and $20.1 billion, respectively.
Medicare spending growth slowed from 6.9% in 2019 to 3.5% in 2020. Medicare spending amounted to $829.5 billion, or 20% of national healthcare spending. Medicare enrollment slowed to 2%.