Patient healthcare spending has skyrocketed in 2021

Data: CMS;  Diagram: Axios Visuals
Data: CMS; Diagram: Axios Visuals

Out-of-pocket health spending by Americans rose 10.4% in 2021, a growth rate not seen since 1985, driven in part by demand for dental services, eyeglasses and medical supplies, according to the Centers for Medicare’s annual National Health and Medicaid Services Expenditure Report.

The big picture: Total health spending increased by just 2.7%, a much slower rate than the 10.3% increase in 2020. But the decline in special federal funding related to pandemics and public health is a big factor in the 2021 and obscures a stronger increase in other areas.

  • When those buckets of spending were excluded, total spending rose 7.6% in 2021, generally reflecting pent-up demand for medical services following the availability of COVID vaccines, according to CMS’s Office of Actuaries.

Why it matters: Spending on out-of-pocket co-payments and deductibles is when most Americans become most aware of the cost of healthcare — and what often makes care unaffordable.

  • This is especially true for people whose insurance premiums are subsidized either by their employer or by the government.
  • Out-of-pocket spending rose particularly sharply for dental services, medical equipment — including glasses and contact lenses — and medical and clinical services.

What you say: “I’m sure families felt the sharp increase in out-of-pocket spending in 2021,” said KFF’s Larry Levitt.

  • “But it was compounded by the fact that spending fell 2.6% in 2020 as the pandemic meant far fewer people were getting medical care other than because of COVID. When people started going back to the doctor in 2021, deductibles and co-payments are also adding up again.”
READ :  LCMC to buy Tulane hospitals in $150M deal, narrowing New Orleans' pool of health care players | Health care/Hospitals

Between the lines: Employer healthcare spending also increased significantly – private company spending rose 6.5% in 2021 after falling 2.9% in 2020.

  • Premium contributions to employer-sponsored health plans accounted for three quarters of this spending.

The Intrigue: Retail prescription drug spending also saw a significant increase last year compared to 2020 and pre-pandemic years, rising by 7.8%.

  • Generics still accounted for the vast majority of total prescriptions, but accounted for just 16% of drug spend — up from 20% in 2017.

The bottom line: Out-of-pocket healthcare spending and employers are huge trends that will affect healthcare policy, and both are not going in a good direction.

  • When people can’t afford their care – or when local businesses are losing money – they make the biggest noise, creating pressure for a political response.

Leave a Reply

Your email address will not be published. Required fields are marked *