2023 National Health Expenditure Highlights & Data via CMS

This was actually released several weeks ago, but given the ongoing Memory Holing of healthcare data at HHS & CMS, I figured I should go ahead and repost it here as well:

National Health Expenditures 2023 Highlights:

Health care spending in the US reached $4.9 trillion and increased 7.5 percent in 2023, growing from a rate of 4.6 percent in 2022. In 2023, private health insurance and Medicare spending grew faster than in 2022, while Medicaid spending and enrollment growth slowed as the COVID-19 public health emergency ended. The health sector’s share of the economy in 2023 was 17.6 percent, which was similar to its share of 17.4 percent in 2022 but lower than in 2020 and 2021 during the height of the COVID-19 pandemic.

The acceleration in health care spending growth (from 4.6 percent in 2022 to 7.5 percent in 2023) reflected growth in non-price factors, such as use and intensity of services (after notably slower growth in 2022). When adjusted for health care price inflation (as measured by the National Health Expenditure (NHE) deflator), real health care spending increased 4.4 percent in 2023—a higher rate than the increase of 1.4 percent for such spending in 2022 and higher than the growth rate of real GDP, which was 2.9 percent in 2023.

Strong growth in private health insurance enrollment contributed to an increase in the insured share of the population that reached 92.5 percent in 2023 from 92.0 percent in 2022. Much of the growth in private health insurance enrollment was due to rapid growth in Marketplace enrollment which increased by 2.7 million individuals in 2023, primarily as a result of enhanced subsidies that were made available by the American Rescue Plan Act of 2021 and renewed under the Inflation Reduction Act of 2022.

Health Spending by Type of Service or Product:

• Hospital Care (31 percent share): Spending for hospital care services increased 10.4 percent in 2023 to reach $1.5 trillion. This rate of growth was the fastest since 1990, when hospital spending increased 10.8 percent. The acceleration in 2023 was driven by strong growth in spending by all major payers, including private health insurance (from 8.0 percent in 2022 to 13.0 percent in 2023), Medicare (from 1.5 percent in 2022 to 6.0 percent in 2023), and other private revenue (from -9.2 percent in 2022 to 27.8 percent in 2023). Faster growth in 2023 was driven by non-price factors (which include the use and intensity of services), with an increased number of hospital discharges and increased Medicare outpatient hospital utilization.

• Physician and Clinical Services (20 percent share): Spending for physician and clinical services increased 7.4 percent to $978.0 billion in 2023, which was faster than the growth rate of 4.6 percent in 2022. Private health insurance spending for physician and clinical services grew 9.4 percent in 2023 (compared with growth of 8.5 percent in 2022), while out-of-pocket spending increased 7.0 percent (faster than its growth rate of 4.6 percent in 2022). Faster growth in 2023 was driven by non-price factors (which includes use and intensity of services), while price growth remained low at 0.6 percent.

• Retail Prescription Drugs (9 percent share): Retail prescription drug spending increased 11.4 percent to $449.7 billion in 2023, accelerating from a rate of 7.8 percent in 2022. The faster growth was experienced by both private health insurance spending, which grew 13.8 percent in 2023 following an increase of 3.5 percent in 2022, and Medicare spending, which increased 12.2 percent in 2023 after 9.0 percent growth in 2022. The rapid growth in spending for drugs used to treat diabetes and obesity contributed to faster overall growth in retail prescription drug expenditures.

• Other Health, Residential, and Personal Care Services (6 percent share): This category includes expenditures for medical services that are generally delivered by providers in non-traditional settings such as schools, community centers, and the workplace, as well as ambulance services and residential mental health and substance abuse facilities. Spending for other health, residential, and personal care services grew 9.1 percent in 2023 to $270.2 billion, decelerating from 9.7 percent growth in 2022. The slightly slower growth in 2023 was driven primarily by a deceleration in spending for home and community-based waivers.

• Nursing Care Facilities and Continuing Care Retirement Communities (4 percent share): Spending for services provided at freestanding nursing care facilities and continuing care retirement communities rose in 2023 by 9.5 percent to $211.3 billion, compared to a growth rate of 5.9 percent in 2022.The faster growth was driven by strong growth in other private revenues as well as an acceleration in out-of-pocket and private health insurance spending.

• Dental Services (4 percent share): Spending for dental services increased 6.2 percent in 2023 to $173.8 billion following a decline of 0.4 percent in 2022. The turnaround was driven by faster growth for Medicare, out-of-pocket, and private health insurance.

• Home Health Care (3 percent share): Spending for services provided by freestanding home health care agencies increased 10.8 percent in 2023 to $147.8 billion, accelerating from growth of 6.7 percent in 2022. Medicare, private health insurance, and out-of-pocket home health spending contributed to the faster growth, while Medicaid spending growth for home health care services slowed.

• Other Professional Services (3 percent share): Spending for other professional services includes establishments of health practitioners (except physicians and dentists) that primarily provide services such as physical therapy, optometry, podiatry, or chiropractic medicine. Spending for other professional services reached $159.9 billion in 2023 and increased 12.0 percent, a faster rate of growth compared to 6.1 percent in 2022. The acceleration was driven by faster growth in Medicare, private health insurance, and out-of-pocket spending.

• Other Non-durable Medical Products (3 percent share): Retail spending for other non-durable medical products, such as over-the-counter medicines, medical instruments, and surgical dressings, increased 7.3 percent to $124.1 billion in 2023, a slower rate of growth than in 2022 when spending increased 8.5 percent. Out-of-pocket spending accounted for 96 percent of total spending for other non-durable medical products in 2023.

• Durable Medical Equipment (1 percent share): Retail spending for durable medical equipment, which includes items such as contact lenses, eyeglasses, and hearing aids, increased 6.2 percent in 2023 to $72.8 billion following slightly faster growth of 7.3 percent in 2022. The slowdown in 2023 was driven by a deceleration in out-of-pocket, Medicaid, and private health insurance spending.

Health Spending by Major Sources of Funds:

• Private Health Insurance (30 percent share): Spending for private health insurance reached $1.5 trillion in 2023 and increased 11.5 percent. The robust growth in 2023 was driven by increased enrollment in Marketplace and employer-sponsored private health insurance plans, strong spending growth in spending for goods and services, and strong growth in the net cost of insurance. In 2023, enrollment in private health insurance increased 1.6 percent, or by 3.3 million individuals.

• Medicare (21 percent share): Medicare spending reached $1.0 trillion in 2023, increasing 8.1 percent following 6.4 percent growth in 2022. A turnaround in traditional care fee-for-service spending growth (from a decline of 1.4 percent in 2022 to an increase of 1.7 percent in 2023) drove the faster growth. Medicare Advantage private plan spending growth remained strong (increasing 14.7 percent in 2023 following 15.7 percent growth in 2022) and accounted for 52 percent of total Medicare expenditures in 2023 (from a 39 percent share in 2019). Total Medicare enrollment grew 2.1 percent in 2023, a slight acceleration from 2022 when enrollment increased 1.9 percent.

• Medicaid (18 percent share): Medicaid spending increased 7.9 percent to $871.7 billion in 2023, a slower growth rate than in 2022 (9.7 percent) and 2021 (9.5 percent). In 2023, average Medicaid enrollment slowed dramatically, increasing 0.8 percent from 7.5 percent in 2022, and reached 91.7 million even as states resumed the re-determination of Medicaid eligibility (also referred to as “unwinding”) following the end of pandemic-era coverage protections.

• Out-of-Pocket (10 percent share): Total out-of-pocket spending increased by 7.2 percent in 2023 to $505.7 billion, a slight acceleration from growth of 6.9 percent in 2022. Hospital care, physician and clinical services, and nursing care facilities and continuing care retirement communities, which collectively accounted for 33 percent of all out-of-pocket spending in 2023, were the main contributors to the faster growth in 2023.

Health Spending by Type of Sponsor:

• In 2023, the federal government and households accounted for the largest shares of national health spending (32 percent and 27 percent, respectively), followed by private businesses (18 percent), state and local governments (16 percent), and other private revenues (7 percent).

• Federal government spending for health care ($1.6 trillion) increased 3.4 percent in 2023 following growth of 1.9 percent in 2022. Federal Medicare expenditures (a 30 percent share of federal government health care expenditures) were the largest contributor to the acceleration in federal government health spending growth and increased 12.9 percent in 2023, following growth of 1.1 percent in 2022. This faster growth was due partly to the
• initial impacts of the Inflation Reduction Act on federal Medicare spending, as well as faster spending growth for Medicare hospital and physician and clinical services’ spending in 2023.

• State and local government health spending ($761.3 billion) increased 11.6 percent in 2023 compared to growth of 6.0 percent in 2022. The state portion of Medicaid payments grew 18.4 percent compared with growth of 6.8 percent in 2022 and reflected the phasing out of the 6.2-percentage-point increase in the federal medical assistance percentage (in the second half of 2023) under the Families First Coronavirus Response Act. The state portion of Medicaid payments constituted the largest portion of total state and local government health expenditures in 2023.

• Health care spending by households ($1.3 trillion) increased 6.8 percent in 2023, a slower rate of growth than the increase of 7.7 percent in 2022. Within the household category, the spending trends in 2023 were mixed. Medicare premiums and payroll taxes paid by individuals experienced slower growth of 4.0 percent in 2023 compared with growth of 11.8 percent in 2022, while out-of-pocket expenditures increased 7.2 percent in 2023 following growth of 6.9 percent in 2022. In addition, household contributions to employer-sponsored private health insurance premiums increased 8.9 percent in 2023 following growth of 8.3 percent in 2022.

• Health care spending by private businesses ($894.0 billion) grew 11.0 percent in 2023, a faster rate than growth of 6.8 percent in 2022. Contributions to employer-sponsored private health insurance premiums (the largest share of private businesses’ health spending) increased 13.0 percent in 2023 following growth of 6.7 percent in 2022. Private health insurance enrollment and the share of employer-sponsored private health insurance that is paid for by private businesses both increased in 2023 and were partially responsible for the overall acceleration in spending by private businesses.

Historical NHE, 2023:

• NHE grew 7.5% to $4.9 trillion in 2023, or $14,570 per person, and accounted for 17.6% of Gross Domestic Product (GDP).

• Medicare spending grew 8.1% to $1,029.8 billion in 2023, or 21 percent of total NHE.

• Medicaid spending grew 7.9% to $871.7 billion in 2023, or 18 percent of total NHE.

• Private health insurance spending grew 11.5% to $1,464.6 billion in 2023, or 30 percent of total NHE.

• Out of pocket spending grew 7.2% to $505.7 billion in 2023, or 10 percent of total NHE.

• Other Third Party Payers and Programs and Public Health Activity spending declined 3.1% in 2023 to $563.4 billion, or 12 percent of total NHE.

• Hospital expenditures grew 10.4% to $1,519.7 billion in 2023, faster than the 3.2% growth in 2022.

• Physician and clinical services expenditures grew 7.4% to $978.0 billion in 2023, faster growth than the 4.6% in 2022.

• Prescription drug spending increased 11.4% to $449.7 billion in 2023, faster than the 7.8% growth in 2022.

• The largest shares of total health spending were sponsored by the federal government (32 percent) and the households (27 percent). The private business share of health spending accounted for 18 percent of total health care spending, state and local governments accounted for 16 percent, and other private revenues accounted for 7 percent.

For further detail see NHE Tables in downloads below.

Projected NHE, 2023-2032:

• Over 2023-32 average NHE growth (5.6%) is projected to outpace that of average GDP growth (4.3%), resulting in an increase in the health spending share of GDP from 17.3 percent in 2022 to 19.7 percent in 2032.

• NHE spending is expected to have grown 7.5% in 2023, faster than GDP growth of 6.1%.

• Reflects broad increases in the use of care associated with the insured share of the population of 93.1% - an unprecedented high.

• Largely related to a record-high level of Medicaid enrollment (91.2M) in 2023, as well as gains in direct-purchase enrollment (8.3M) over 2023-25.

• Health price growth remains modest, though faster than pre-pandemic.

• By 2032 the insured share falls to 90.7%.

• Consistent with the President’s Budget, Medicaid enrollment is projected to decline to 81.0M in 2024 and slightly further to 79.4M by 2025 following the expiration of the continuous enrollment requirement.

• Direct-purchase enrollment is expected to decline by 7.3M in 2026 (-19.2%) due to expiration of the IRA’s temporary extension of enhanced subsidies and associated temporary Special Enrollment Period (SEP).

• Over 2027-32, personal health care price inflation and growth in the use of health care services and goods contribute to projected health spending that grows at a faster rate than the rest of the economy.

• Inflation Reduction Act (IRA) Impacts on NHE:
  • Initially, upward pressure on Medicare “retail” prescription drug spending is expected as a result of the IRA’s Part D benefit restructuring ($2,000 cap on out-of-pocket spending on Part D; rebates shift from program to point of sale when drug negotiations begin).
  • Conversely, downward pressure on Medicare spending is expected associated with (manufacturer discounts for the low-income population (starting in 2025) and IRA provisions that are associated with drug price negotiations and the linking of price increases to the Consumer Price Index (CPI).
  • Beginning in 2028, spending growth rates for Medicare outpatient hospital and physician and clinical services are expected to be lower than they otherwise would have been, mainly because the IRA’s drug negotiation provision will begin to apply to Medicare Part B drugs.
  • The NHE projections show lower out-of-pocket spending associated with the IRA due to more generous Medicare Part D benefits reflecting the elimination of the 5% coinsurance for catastrophic coverage in 2024, the implementation of a $2,000 cap on out-of-pocket spending on Part D drugs in 2025, and the applicability of drug price negotiations beginning in 2026.

For further detail see NHE projections 2023-2032 in downloads below.

 

NHE by Age Group and Sex, Selected Years 2002, 2004, 2006, 2008, 2010, 2012, 2014, 2016, 2018, and 2020:

• Per person personal health care spending for the 65 and older population was $22,356 in 2020, over 5 times higher than spending per child ($4,217) and almost 2.5 times the spending per working-age person ($9,154).
• In 2020, children accounted for approximately 23 percent of the population and about 10 percent of all PHC spending.
• The working-age group comprised the majority of spending and population in 2014, 53 percent and over 60 percent respectively.
• Older Adults (aged 65 and older) were the smallest population group, about 17 percent of the population, and accounted for approximately 37 percent of all spending in 2020.
• Per person spending for females ($10,887) was 14 percent more than males ($9,554) in 2020.
• In 2020, per person spending for male children (0-18) was 10 percent more than females. However, for working age adults per person spending for females was 20 percent more than for males. For older adults, spending for males was 2 percent more than for females.

For further detail see health expenditures by age in downloads below.

NHE by State of Residence, 1991-2020:

• In 2020, per capita personal health care spending ranged from $7,522 in Utah to $14,007 in New York. Per capita spending in New York state was 37 percent higher than the national average ($10,191) while spending in Utah was about 26 percent lower.
• Health care spending by region continued to exhibit considerable variation. In 2020, the New England and Mideast regions had the highest levels of total per capita personal health care spending ($12,728 and $12,577, respectively), or 25 and 23 percent higher than the national average. In contrast, the Rocky Mountain and Southwest regions had the lowest levels of total personal health care spending per capita ($8,497 and $8,587, respectively) with average spending 17 and 16 percent lower than the national average, respectively.
• Between 2014 and 2020, average growth in per capita personal health care spending was highest in New York at 6.1 percent per year and lowest in Wisconsin at 3.0 percent per year (compared with average growth of 4.3 percent nationally).
• The spread between the highest and the lowest per capita personal health spending across the states has remained relatively stable over 2014-20. Accordingly, the highest per capita spending levels were 90 to 100 percent higher per year than the lowest per capita spending levels during the period.
• Medicare expenditures per beneficiary were highest in Florida ($13,652) and lowest in Vermont ($8,726) in 2020.
• Medicaid expenditures per enrollee were highest in North Dakota ($12,314) and lowest in Georgia ($4,754) in 2020.
• For further detail, see health expenditures by state of residence in downloads below.

NHE by State of Provider, 1980-2020:

• Between 2014 and 2020, U.S. personal health care spending grew, on average, 4.8 percent per year, with spending in Arizona growing the fastest (6.6 percent) and spending in Vermont growing the slowest (2.7 percent).
• In 2020, California’s personal health care spending was highest in the nation ($410.9 billion), representing 12.2 percent of total U.S. personal health care spending. Comparing historical state rankings through 2020, California consistently had the highest level of total personal health care spending, together with the highest total population in the nation. Other large states, New York, Texas, Florida, and Pennsylvania, also were among the states with the highest total personal health care spending.
• Wyoming’s personal health care spending was lowest in the nation (as has been the case historically), representing just 0.1 percent of total U.S. personal health care spending in 2020. Vermont, North Dakota, Alaska, and Montana were also among the states with the lowest personal health care spending in both 2020 and historically. All these states have smaller populations.
• Gross Domestic Product (GDP) by state measures the value of goods and services produced in each state. Health spending as a share of a state’s GDP shows the importance of the health care sector in a state’s economy. As a share of GDP, West Virginia ranked the highest (28.7 percent) and Washington state the lowest (11.7 percent) in 2020.