Home Health Spending Flat As Health Care Utilization Rebounds

Spending on home health care stayed mostly flat in 2021, a new analysis from the Office of the Actuary at the Centers for Medicare & Medicaid Services (CMS) reveals.

The steady spending on home health care last year came despite a sharp dip in government funding tied to the public health emergency (PHE). The decrease in PHE-related funding was generally offset by a rebounding of health care utilization across the board, according to the analysis, published online Wednesday by Health Affairs.

“Federal COVID relief funding had a greater impact on growth for nursing care facilities and home health care than it did for other professionals or dental services, as nursing homes and home health care agencies received a large amount of supplemental funding in 2020,” CMS statistician Micah Hartman said during a conference call with members of the media.


Specifically, national health expenditures on home health care totaled $125.2 billion in 2021, a year-over-year increase of less than 1%, according to the CMS analysis.

From 2015 to 2020, national health spending on home health care climbed from $89.6 billion to $125 billion. The largest year-over-year jump came in 2020, when spending increased by more than $12.6 billion over 2019 largely because of COVID relief.

CMS analysis of 2021 national health spending (published by Health Affairs)

Government spending on Paycheck Protection Program (PPP) loans and the Provider Relief Fund totaled $52.4 billion and $121.6 billion, respectively, in 2020. Last year, those numbers dropped to $21.4 billion and $28.3 billion.


“In 2021, the [COVID-related] supplemental federal spending for nursing homes and home health care declined to a much lower level, bringing down the overall growth rate for both sectors, with nursing home spending declining in 2021,” continued Hartman, one of the lead authors of the CMS analysis.

While home health spending stayed flat, national health expenditures on nursing care facilities and continuing care retirement communities (CCRCs) decreased from $196.9 billion to $181.3 billion from 2020 to 2021.

Overall, health care spending in the U.S. grew 2.7% to reach $4.3 trillion in 2021, a much slower rate than the increase of 10.3% seen in 2020.

The share of the economy accounted for by the health sector fell from 19.7% in 2020 to 18.3% in 2021. While health care accounted for a smaller piece of the pie, expenditures were still higher than the 17.6% share in 2019.

“The trends in health care spending in 2020 and 2021 are inextricably linked to the many unique impacts of the COVID-19 pandemic,” the analysis emphasized. “In 2020, the unprecedented government response to the pandemic dramatically increased federal health care spending through various programs and increased federal public health expenditures. At the same time, mitigation efforts such as stay-at-home orders, social distancing, and restrictions on the use of health care services tended to reduce the use of health care, whereas the direct treatment of people with COVID-19 and increased testing offset some of that reduction.”

Medicare spending accounted for 21% of total national health care expenditures and reached $900.8 billion in 2021, up 8.4% over the previous year. Medicare fee-for-service expenditures, in particular, grew by 3.9% and accounted for more than half of all Medicare spending.

Meanwhile, Medicaid spending accounted for 17% of total health care expenditures in 2021, reaching $734 billion. That figure was a 9.2% increase compared to 2020.

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