U.S. health care spending hits $4.5 trillion in 2022

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Physician and clinical services made up about 20% of $4.5 trillion spent on health care in 2022, according to the U.S. Centers for Medicare & Medicaid Services (CMS).

Medical spending grew by 4.1% last year, faster than the 2021 growth of 3.2%, but less than the 2020 spending growth of 10.6% due to the COVID-19 pandemic. The figures were part of the National Health Expenditures 2022 report issued by CMS.

The report said spending on physician and clinical services increased 2.7% to $8.84 billion, though that was slower than the increase of 5.3% in 2021, according to CMS. Medicare, Medicaid, private health insurance, and out-of-pocket expenditures all were part of the slower growth in 2022.

Hospital services

Hospital care hit $1.4 trillion, accounting for 30% of all health care spending. The 2022 growth rate of 2.2% was lower than the 4.5% rise in 2021, according to CMS.

“The slower growth in 2022 reflected a slowdown in spending for hospital care by private health insurance, Medicare, and Medicaid and by a decline in other private revenues,” the CMS report said. “Slower growth in hospital prices and a decline in hospital days and discharges contributed to the lower growth in 2022.”

Prescription drugs

Retail prescription drug spending accounted for 9% of all health care spending, rising by 8.4% to $405.9 billion in 2022. That increase was more than the 6.8% growth in 2021, with more Medicare and out-of-pocket spending for prescription drugs, but slower growth in Medicaid and private health insurance.

“The faster growth in 2022 was influenced by faster growth in the number of prescriptions dispensed and an increase in retail prescription drug prices (1.2% in 2022) after four consecutive years of decline,” the report said.

Health insurance

Health insurance rates hit a record high in 2022, with 92% of the population covered. There were 26.6 million people uninsured, down from 28.5 million the year before. Private health insurance enrollment grew by 2.9 million people and Medicaid enrollment rose by 6.1 million last year.

Funding sources

Private health insurance covered $1.3 trillion, or 29%, of health care spending. That amount grew by 5.9% last year, down from 6.3% growth in 2021. Growth was slower for private health insurance coverage of costs for hospital care, physician and clinical services, and dental services, the report said.

Medicare spending made up 21% of all health care expenditures, increasing 5.9% to hi $944.3 billion in 2022. That growth rate was down from a 7.2% increase in 2021.

Fee-for-service spending dipped 1.9% last year, while Medicare private plan spending grew by 15.1% and accounted for half of all Medicare spending. Enrollment in private plans rose by 8.5% and fee-for-service enrollment dropped by 3%. Total Medicare enrollment rose by 1.2 million people, or 1.9%, up from growth of 1.7% in 2021.

Medicaid spending accounted for 18% of all health care spending, growing 9.6% to reach $805.7 billion in 2022. It was the third consecutive year of growth above 9%. Enrollment grew by 7.2%, down from 11.1% growth in 2021 but more than 4.6% growth in 2020.

“This amounts to about 18 million individuals gaining Medicaid coverage between 2019 and 2022,” the report said. “Faster Medicaid enrollment growth since 2019 reflects the newly enrolled as well as the continuous enrollment requirement of the Families First Coronavirus Response Act that took effect on March 18, 2020 and ended on March 31, 2023.”

Health care in the GDP

Health care spending in 2022 decreased as a proportion of the U.S. gross domestic product (GDP). It was 17.3% of the 2022 national GDP, lower than the 18.2% share in 2021 and the record 19.5% in 2020. GDP grew at strong rates, 10.7% in 2021 and 9.1% in 2022, and the health care spending share for 2022 was slightly less than the recent average share of 17.5% from 2016 to 2019.