National home health spending soared to a whopping $113.5 billion in 2019, according to a new analysis from the Centers for Medicare & Medicaid Services (CMS) Office of the Actuary published Wednesday in the journal Health Affairs.
While that figure marked another all-time high for home health care, the U.S. government still spent far more on nursing care facilities and hospital care last year.
That may change in 2020 due to the ongoing COVID-19 pandemic and a need to decentralize health care services, though it’s probably still too soon to draw any long-term spending conclusions.
Overall 2019 health care spending in the United States was $3.8 trillion, up 4.6% compared to the previous year, the CMS Office of the Actuary estimates. The share of the economy devoted to health care spending, as measured by the GDP, was 17.7%.
“Health care spending in 2019 increased at about the same rate as it had in 2018 and was similar to the average annual growth since 2016,” Anne Martin, an economist in the CMS Office of the Actuary and first author of the Health Affairs article, noted. “This relative stability in health care spending growth over the last four years preceded the COVID-19 pandemic in 2020. The full impact of the pandemic on the health care sector is still not known, but it will certainly have profound consequences on the provision and consumption of health care in 2020 and perhaps beyond.”
National spending on home health care services has grown by at least 5% annually since 2015. From 2018 to 2019, spending increased by 7.7% — the biggest year-over-year jump since at least 2013.
Wednesday’s analysis does not go into the reasons driving that substantial increase, but there are several likely factors.
On a demographic level, the country’s universe of Medicare beneficiaries is becoming more medically complex, with older individuals often living with four or more chronic conditions and functional limitations. At the same time, more and more hospitals and community-based referral sources are opting to send their patients to home health providers instead of skilled nursing facilities (SNFs).
Accountable care organizations (ACOs), health plans and others are similarly recognizing the value of home-based care more than ever.
These and other trends have only accelerated during the public health emergency in 2020.
“The biggest thing that we will see in home health care is that we’re given a seat at the ‘big kids’ table,’” Beau Sorensen, COO at First Choice Home Health & Hospice, told Home Health Care News earlier this week. “The recognition from COVID-19 that the country needs to move away from keeping people in congregate living and post-acute settings, combined with the expertise that we have developed through decades of caring for people at home, will lead to a much larger role for home health and hospice in the care continuum.”
Total Medicare spending grew by 6.7% in 2019 to $799.4 billion. Comparatively, that accounted for 21% of total national health care expenditures.
Meanwhile, total Medicaid spending grew by 2.9% to 613.5 billion. That accounted for 16% of total national health spending.
Government spending on hospital care hit an estimated $1.2 trillion last year, according to the CMS Office of the Actuary. Put differently, roughly one out of every three dollars spent on health care in 2019 was tied to hospital-based care.
Spending on “nursing care facilities and continuing care retirement communities” was an estimated $172.7 billion in 2019 — nearly $60 billion more than spending on home health care. While home health expenditures grew by more than 7% from 2018 to 2019, however, spending in this area only grew by 3.3%.