CMS analysts have released a new analysis of health care costs, finding that health care inflation in 2023 has increased by a whopping 7.5%. Notably, hospital cost inflation jumped from 3.2% in 2022 to 10.4% in 2023.
Analysts with the Centers for Medicare and Medicaid Services (CMS) National Health Expenditure Accounting Team predicted in late December that the overall U.S. health care inflation rate will rise to 7.5% in 2023, significantly higher than the current 4.6% in 2023. It was reported that it exceeded. US health spending reached $4.9 trillion. The team’s findings are health issues, In an article titled “National Health Expenditures in 2023: Growth Will Accelerate as Insurance Coverage and Utilization Increase.”
Analysts Anne B. Martin, Micah Hartman, Benjamin Washington, and Aaron Catlin said, “U.S. health spending will reach $4.9 trillion, increasing 7.5 percent in 2023 from 4.6 percent in 2022. In 2023, the number of people enrolled in private health insurance increased significantly for the second consecutive year, and the proportion of insured people in the population was 92.5. For Medicaid, spending and enrollment increased faster than in 2022 as the COVID-19 public health emergency ended. Growth has slowed. The health sector’s share of the economy in 2023 was 17.6%, similar to its 17.4% share in 2022, but lower than in 2020 and 2021, at the height of the COVID-19 pandemic. State and local governments accounted for a higher share of spending in 2023 than in 2022, but as COVID-19-related funding decreased and federal Medicaid spending growth slowed, the federal government’s share decreased. It has declined.”
Furthermore, the analysts said, “Overall economic growth, as measured by gross domestic product (GDP), has seen a period of instability, with a 0.9% decline in 2020, a 10.9% increase in 2021, and a 9.8% increase in 2021. In 2023, it increased by 6.6%.” percentage in 2022 (Exhibit 1). Despite fluctuations in health spending and GDP growth rates over the past few years, on average, growth rates from 2020 to 2023 were similar: 6.6% per year and 6.5% per year, respectively. Therefore, the share of health spending in GDP in 2023 will be 17.6%, similar to the pre-COVID-19 pandemic share of 17.5% in 2019. ”
What is driving spending growth? “Accelerating growth in health spending (from 4.6% in 2022 to 7.5% in 2023) is driving growth in non-price factors such as service utilization and intensity. ”, the analysts wrote. “Adjusting for health price inflation (as measured by the national health expenditure deflator), real health spending increased by 4.4 percent in 2023. This is higher than the 1.4 percent increase in health spending in 2022; real GDP in 2023 was 2.9%. ”
And they say, “Health care prices, as measured by the National Health Expenditure Deflator, increased by 3.0 percent in 2023 (Exhibit 1), compared to a 3.1 percent increase in 2022 and an average annual growth rate of 2.5 percent from 2020 to 2022. It is similar to a percentage.” However, it is clearly faster than the average economy-wide inflation rate of 1.4% from 2016 to 2019, measured in GDP prices. The growth rate in 2023 was 3.6%, much slower than the 4.5% growth in 2021 and the 7.1% growth in 2022 (the highest growth rate since 1981). ”
Among the factors involved: “The strong growth in private health insurance enrollment that began in 2022 will continue through 2023, contributing to an increase in the proportion of the population who are insured, from 92.0 percent in 2022. In 2023, 92.5 percent of the increase in private health insurance enrollment was due to the rapid increase in enrollment in the Affordable Care Act Marketplace during 2018. 5.8 million from 2020 to 2023, primarily as a result of enhanced subsidies made available through the American Rescue Plan Act of 2021 and renewed under the Inflation Control Act of 2022. Number of Medicaid enrollees is 2023 It slowed significantly in 2017, largely because states resumed benefit redetermination, which means people remain eligible for and enroll in Medicaid after the end of pandemic-era coverage protections (also known as “rollbacks”). numbers remained high. There are 91.7 million beneficiaries, or an average increase of 15.5 million people over the number of registrants in 2020. ”
Meanwhile, among payers, the acceleration in overall health spending growth in 2023 will be primarily due to private health insurance spending, with growth of 11.5 percent in 2023 compared to 6.8 percent in 2022. Medicare spending also grew at a faster pace, increasing by 8.1% in 2022, compared to 6.4% in 2023. For both payers, this rapid growth in spending was driven by hospitals. 8 In contrast, for Medicaid, spending growth remained strong but slowed from 9.7 percent in 2022 to 7.9 percent in 2023 (Exhibit 3). This slowdown is due to the expiration of Medicaid’s continued enrollment provision on March 31, 2023, which significantly slowed enrollment growth. ”
Hospital, doctor, and prescription drug costs rise significantly
“Among health care products and services, the acceleration in total national health spending in 2023 will be driven primarily by accelerated growth in the three largest categories: hospital care, physician and clinical services, and prescription drug retail,” CMS analysts wrote. “It was brought about,” he said. Hospital spending increased 10.4 percent in 2023, following a 3.2 percent increase in 2022. Spending on physicians and clinical services also increased by 7.4 percent in 2023, following a 4.6 percent increase in 2022 (Exhibit 4). In both cases, this acceleration reflects an increase in non-price factors such as service usage and intensity, after a significant slowdown in growth in 2022 (data not shown). Retail prescription drug spending also contributed to the acceleration, increasing by 11.4% in 2023 from 7.8% in 2022 (Exhibit 4). This is primarily due to a change in the mix of medicines dispensed towards higher priced, newer branded drugs 10 and faster drugs. Rising retail prescription drug prices. ”
