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National Health Care Spending In 2020: Growth Driven By Federal Spending In Response To The COVID-19 Pandemic
Micah Hartman1, Anne B Martin2, Benjamin Washington3
1Micah Hartman (micah.hartman@cms.hhs.gov), Office of the Actuary, Centers for Medicare and Medicaid Services (CMS), Baltimore, Maryland.
Insights
US health care spending surged in 2020 due to the COVID-19 pandemic, reaching $4.1 trillion. This led to a significant increase in the national health expenditure share of the economy.
Area of Science:
- Health Economics
- Public Health Policy
- Healthcare Administration
Background:
- US health care spending experienced a notable acceleration in 2020.
- National health expenditures reached $4.1 trillion, a 9.7% increase from 2019.
- This contrasts with a 4.3% increase observed in the previous year.
Purpose of the Study:
- To analyze the drivers of increased US health care spending in 2020.
- To examine the impact of the COVID-19 pandemic on national health expenditures.
- To assess shifts in health insurance coverage and the uninsured population.
Main Methods:
- Analysis of national health expenditure data for 2020.
- Comparison of spending trends between 2019 and 2020.
- Examination of federal health care expenditures and their relation to the pandemic.
- Assessment of changes in gross domestic product (GDP) and the health spending share of the economy.
Main Results:
- US health care spending rose by 9.7% to $4.1 trillion in 2020.
- Federal health care expenditures increased by 36.0%, largely due to the COVID-19 pandemic.
- The share of the economy devoted to health care spending increased to 19.7% as GDP declined by 2.2%.
- The number of uninsured individuals decreased, with notable shifts in coverage types.
Conclusions:
- The COVID-19 pandemic significantly impacted US health care spending in 2020.
- Increased federal spending was a primary driver of the overall expenditure rise.
- The pandemic influenced both the volume of health care spending and insurance coverage patterns.
Abstract:
US health care spending increased 9.7 percent to reach $4.1 trillion in 2020, a much faster rate than the 4.3 percent increase seen in 2019. The acceleration in 2020 was due to a 36.0 percent increase in federal expenditures for health care that occurred largely in response to the COVID-19 pandemic. At the same time, gross domestic product declined 2.2 percent, and the share of the economy devoted to health care spending spiked, reaching 19.7 percent. In 2020 the number of uninsured people fell, while at the same time there were significant shifts in types of coverage.
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