Healthcare spending slows in the US, AMA analysis finds

US healthcare spending has slowed for the first time in recent years, reaching $4.3 trillion in 2021—a near 3% increase, according to a new American Medical Association (AMA) analysis.

An AMA Policy Research Perspective released in late March found that health expenditures accounted for 18.3% of the US gross domestic product in 2021, compared to 19.7% in 2020 (though that’s still above the 17.6% of GDP seen in 2019 and 2018).

But while spending was up slightly (2.7%) in 2021, it remained far below the 10.3% growth seen in the prior year (when health expenditures topped $4.1 trillion) and the 4.2% average annual growth rate seen in the decade leading up to the Covid-19 pandemic.

Apoorva Rama, the report’s author, attributed that drop in spending growth to a substantial decline in pandemic-related federal government expenditures that offset increased utilization of medical goods and services in 2021.

Findings:

• Nearly all (95.1%) healthcare spending in 2021—about $4 trillion—was on health consumption expenditures. That includes government public health activities ($187.6 billion), government administration ($51.5 billion), net cost of health insurance ($255.7 billion), and personal healthcare spending ($3.5 trillion).
• Almost one-third of that personal healthcare spending went toward hospital care ($1.3 trillion).
• Private health insurance accounted for 28.5% of health spending (about $1.2 trillion) in 2021, while Medicare made up 21% (about $900.8 billion) and Medicaid accounted for 17% ($734.0 billion). About 10% of spending ($433.2 billion) was out of pocket, including copayments and coinsurance payments.

The analysis is based on the 2021 US National Health Expenditures data from the Centers for Medicare and Medicaid Services.—SY