National Home Health Spending Dips to $129.1 Billion as Health Care Sector Normalizes

U.S. health care expenditures ballooned in 2020 because of the COVID-19 pandemic, but they’re starting to normalize. National home health spending, in turn, experienced a comparatively small decline over the past year.

That’s according to the Office of the Actuary at the Centers for Medicare & Medicaid Services (CMS), which published its annual spending analysis in Health Affairs on Monday.

“While there is still considerable uncertainty around the COVID-19 pandemic, its related health and economic impacts are projected to lessen in the next few years,” John Poisal, deputy director for the National Health Statistics Group in CMS and first author of the Health Affairs analysis, said in a press release. “From 2025 onward, we expect economic and demographic factors to reemerge as the most influential drivers of health sector spending trends.”


Overall, U.S. health care spending grew by 4.2% in 2021 to nearly $4.3 trillion. During the prior year, national health expenditures grew by 9.7% to above $4.1 trillion, fueled by large inflows of federal supplemental funding to mitigate the worst of the COVID-19 crisis.

“As the COVID-19 pandemic unfolded in 2020, the health sector experienced significant declines in the use of health care services, unprecedented levels of financial stimulus provided by the federal government, and substantial health insurance enrollment shifts as many people lost employer-sponsored health coverage and sought coverage elsewhere,” the Office of the Actuary analysis noted.

Meanwhile, U.S. home health spending dipped to an estimated $121.6 billion in 2021, down from $123.7 billion in 2020.


At $181.6 billion, spending on nursing care facilities and continuing care retirement communities outpaced home health spending, though it saw an even sharper year-over-year decrease. While home health spending dipped 1.7% from 2020 to 2021, expenditures on that facility-based care category plummeted 7.7%.

Due to the slow normalization of health care and a rebounding economy, health care is projected to account for about 18.8% of the nation’s gross domestic product in 2021.

Medicare spending swelled to $923 billion in 2021, up 11.3% from $829.5 billion in 2020. Medicaid spending similarly jumped 10.4% year over year, from $671.2 billion to $740.8 billion.

Figuring out the future

Looking ahead, U.S. health care spending is projected to reach nearly $4.5 trillion in 2022, growing by a rate of 4.6%.

Spending on both Medicare and Medicaid is expected to increase again, but at a slower level. Even so, Medicare spending is projected to exceed $1 trillion for the first time in 2023.

“However, in 2030, the baby boom generation will no longer be newly enrolling in the program for the first time since 2011,” Andrea Sisko, an economist with the CMS Office of the Actuary, said during a Monday morning press conference discussing the new analysis. “And in addition, sequestration cuts are scheduled to increase in that year. As a result, annual spending growth for Medicare in 2030 is expected to be the lowest within the 2025 through [2030] period.”

From 2022 to 2024, home health spending is projected to be $129.1 billion, $139.1 billion and $148.9 billion, respectively. By 2030, home health spending is expected to reach $226.4 billion.

The national health spending analysis from the CMS Office of the Actuary has been published annually since 1960.

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