A new analysis from the Office of the Actuary at the Centers for Medicare & Medicaid Services (CMS) estimates that health care spending in the U.S. increased 9.7% to $4.1 trillion in 2020. And home health care, in particular, experienced robust spending growth.
The retrospective analysis – which details a truly unprecedented year in health care – was published online by Health Affairs on Wednesday.
“Obviously, 2020 was was like no other year that we’ve estimated in the history of the national health expenditure accounts,” Aaron Catlin, deputy director of the National Health Statistics Group, said during a call with reporters. “There are so many pandemic-related challenges to the health sector, including economic shutdowns, reduced utilization, lower patient care, revenue, shortages of medical equipment and supplies, and increased costs for treating COVID patients.”
Overall, the share of the economy devoted to health care spending spiked in 2020, reaching 19.7%.
Home health care spending reached $123.7 billion last year, a 9.5% increase over $113 billion in 2019. Much of the spending growth was linked to the government relief programs designed to keep health care providers afloat during the worst of the COVID-19 crisis.
That includes, for example, the Paycheck Protection Program (PPP) and the Provider Relief Fund (PRF).
“Out of the four services shown, nursing care facilities and home health care agencies received the largest amounts of COVID-relief funding in the form of Paycheck Protection loans or from the Provider Relief Fund, contributing to faster rates of spending growth in 2020 compared to 2019,” National Health Statistics Group economist Anne Martin said during the call.
Medicare spending hit $829.5 billion in 2020, accounting for 20% of total national health care expenditures. Fee-for-service Medicare spending accounted for 55% of overall Medicare spending in 2020, down from 61% in 2019.
“Private Medicare” expenditures, or Medicare Advantage (MA) spending, made up the remainder. Spending in that category grew 17.1% in 2020, up from 15.3% growth in 2019.
“Medicare spending for most services slowed or declined in 2020 as the result of a drop in utilization, but was most prominent for hospital care, and physician and clinical services,” Martin said. “One service within Medicare experienced faster growth in 2020 – and that was nursing home care. This was driven by increased utilization and spending, resulting primarily from a waiver that allowed coverage of skilled nursing facility (SNF) services without a prior in-patient hospital stay.”
Medicaid expenditures reached $671.2 billion in 2020, accounting for 16% of total national health spending. Medicaid spending increased 9.2% in 2020, a rate that was roughly triple the growth of 3% in 2019.
The accelerated Medicaid spending was largely driven by higher enrollment, but home- and community-based services (HCBS) also played a part.
“The largest contributors to faster Medicaid spending growth in 2020 were hospitals, and other health, residential and personal care services, which was due mainly to an acceleration in spending on [HCBS] waivers,” Martin continued.
The national health spending analysis from the CMS Office of the Actuary has been published annually since 1960.
PRF spending was $122 billion in 2020, according to the analysis. PPP spending was $53 billion.
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