US health spending rose to over $4 trillion in 2020 amid pandemic response

The United States spent more than $4 trillion on health care for the first time in 2020, as government spending in response to COVID-19 drove higher growth in health expenditures. 

The report released by the Office of the Actuary at the federal Centers for Medicare and Medicaid Services (CMS) on Wednesday found U.S. health care spending increased 9.7 percent in 2020 to $4.1 trillion, or $12,530 per person. 

That growth rate is significantly higher than the roughly 5 percent growth in health spending in recent years. The report, published in Health Affairs, explains that by pointing to the massive 36 percent increase in government spending on health care in response to COVID-19. 

That includes the $122 billion Congress allocated for the Provider Relief Fund to help hospitals deal with the pandemic, as well as increased Medicaid spending. 

Amid unprecedented economic upheaval due to the pandemic, enrollment in job-based health insurance declined by 2.3 million people, while Medicaid enrollment jumped up by 3.7 million people. 

With that safety net in place, the number of uninsured fell slightly, from 31.8 million to 31.2 million, the report said. 

“The substantial growth in health care spending was the largest since 2002 and driven by the unprecedented government response to the global pandemic,” said Micah Hartman, a statistician in the CMS Office of the Actuary. “Federal spending increased rapidly in 2020 as the government increased public health spending to combat the pandemic and provided significant assistance to health care providers.”

Health spending rose to 19.7 percent of gross domestic product, almost one-fifth of the economy, up from 17.6 percent in 2019. 

The increase in health spending came despite many people delaying elective procedures due to the pandemic. 

“New federal estimates show that even as health care use declined during the pandemic, health spending grew by 9.7% in 2020,” tweeted Larry Levitt, a health policy expert at the Kaiser Family Foundation. “It’s remarkable how much the government has propped up the health system during the crisis, financing a majority of health spending for the first time.”