National health care expenditures in the U.S. grew 2.7% to reach $4.3 trillion in 2021, according to a new analysis from the Office of the Actuary at the Centers for Medicare & Medicaid Services (CMS).
That growth came at a much slower rate than the previous increase of 10.3% seen in 2020, with the slowdown largely attributed to reduced spending on COVID-19 support, including Paycheck Protection Program (PPP) loans and the Provider Relief Fund (PRF).
“The Provider Relief Fund and Paycheck Protection Program loans provided financial assistance to providers during the public health emergency,” CMS economist Anne Martin said Wednesday during a conference call with members of the media to discuss the new analysis. “These sources continue to provide funding in 2021, but at much lower levels and in 2020.”
The health care sector accounted for 18.3% of the U.S. economy in 2021, down from 19.7% in 2020, according to the analysis, published online by Health Affairs. While health care accounted for a smaller piece of the pie, expenditures were still higher than the 17.6% share in 2019.
Published annually at the end of the year, the analysis does not specifically call out hospice expenditures. It nonetheless offers insight into macro-level health care spending trends that hospice operators may find interesting.
Medicare spending, for example, accounted for 21% of total national health care expenditures and reached $900.8 billion in 2021. That was up 8.4% over the previous year.
Despite the growth of Medicare Advantage (MA) and alternative payment models, Medicare fee-for-service expenditures, in particular, grew by 3.9%. Fee-for-service Medicare accounted for more than half of all Medicare spending.
“Enrollment in fee for service continued to decline for the third year in a row at minus 3.8% growth in 2021,” CMS statistician Micah Hartman said during the call.
Per enrollee Medicare spending increased at a faster rate this year than in 2020 at 6.6%.Spending increased 1.5% last year. Fee-for-service per enrollee spending rose 8%.
Hospice continues to be paid for predominantly through fee-for-service Medicare, though the value-based insurance design (VBID) demonstration does offer a pathway to MA for some. For context: In 2019, hospice utilization among Medicare decedents reached 51.7%, according to industry statistics.
Utilization fell to 47.8% in 2020, according to the Medicare Payment Advisory Commission. This was the first decline in years, which the commission attributed to the COVID-19 pandemic.
Broadly, much of the growth in national health expenditures can be linked to overall health care utilization recovering, as lockdowns ended and elective surgeries returned to near-normal levels in 2021.
“In the near term, the severity of the COVID-19 pandemic and its impacts on health care spending trends are expected to lessen while at the same time, federal COVID-19 funding continues to unwind and utilization trends stabilize,” the analysis noted. “However, there is still substantial uncertainty associated with this disease, which could have significant effects on future health care spending trends.”
Government spending on PPP loans and PRF payouts totaled $52.4 billion and $121.6 billion, respectively, in 2020. Last year, those numbers dropped to $21.4 billion and $28.3 billion, according to the CMS analysis.
Hospice providers were not major sources of those expenditures.
In fact, end-of-life care organizations often found themselves at the “end of the list” for PRF money, Hospice News previously reported.
“There’s been disproportionate support for institutional providers, and even much less support for community-based providers,” Edo Banach, former leader of the National Hospice and Palliative Care Organization (NHPCO) told Hospice News in October 2021. “Hospice, often and unfortunately, comes really at the end of the list.”