National Health Care Spending Increased in 2020, Including in the Medicare Program

In an unsurprising official announcement, the Office of the Actuary and the Centers for Medicare & Medicaid Services (CMS), reported a 9.7% increase in total national health care spending in 2020. The increase, driven largely by government spending in response to the COVID-19 pandemic, is the fastest rate of growth since 2002. However, when spending on federal programs—including COVID-19 supplemental funding, COVID-testing, vaccine development, and payments to health care providers under the Provider Relief Fund and the Paycheck Protection Program—are removed, the growth rate was only 1.9%. The Office of the Actuary explains that this decrease from the 4.3% increase in 2019 is due to the reduced use of medical care because of the pandemic.

Bright spots in the report show that the number of uninsured individuals decreased in 2020, as increased Medicaid and Marketplace enrollment more than offset the reduction of employer-sponsored coverage as a result of pandemic-spurred job losses. Key policies, like easing enrollment windows for the Marketplace, eliminating burdensome re-certification processes for Medicaid, and administrative simplification (like the elimination of requirements for in-person appointments) all played a role.

Notably, Medicare spending grew slower in 2020 than in 2019, with an increase of 3.5% compared to a 6.9% increase in the previous year. Spending in Original Medicare actually declined by 5.3%, though Medicare Advantage plan spending grew 17.1%, an increase from the 15.3% growth in 2019.

The full 2020 National Health Expenditures data is available in full on the CMS website.