Spending on hospital care surged in 2023: CMS
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U.S spending on hospital care grew at its fastest clip in more than three decades last year, according to a new federal analysis of health expenditures.
The big picture: Higher demand for medical procedures, including more Medicare patients receiving outpatient care, helped drive a 10.4% year-over-year spending surge on hospitals while prices for services remained relatively stable.
- The increase was the highest recorded since 1990.
- Hospital spending totaled $1.5 trillion in 2023, by far the most of any category of medical care, per federal data analyzed by actuaries at the Centers for Medicare and Medicaid Services and published in Health Affairs.
By the numbers: The nation's health expenditures reached $4.9 trillion overall in 2023, a 7.5% increase from 2022.
- Hospital spending constituted 31% of the total, compared with physician and clinical services, which accounted for 20%. Retail prescription drugs accounted for 9%, according to the analysis.
Zoom in: The spike in hospital spending stems mostly from Americans' increased use of hospital services and higher-intensity care, said Anne Martin, an economist with the Office of the Actuary at CMS.
- Hospital discharges, often used to illustrate how many patients are getting hospital care, increased 1.6% in 2023, following a small decline in 2022.
- Other private revenues for hospitals — which include investment income, philanthropic donations and income from gift shops, parking lots and educational programs — also grew by nearly 28% last year after falling about 9% in 2022.
- Hospital prices grew 2.7%, which is nearly the same growth rate as in 2022. Health prices typically lag behind price changes in the overall economy because of contractual agreements between insurers and providers, Martin told reporters Wednesday.
Between the lines: Enrollment in private health insurance grew by 3.3 million people as enhanced subsidies for Affordable Care Act marketplace coverage continued, which contributed to an 11.5% increase in private health insurance spending.
- Private health insurance spending on hospital care grew 13% in 2023. Commercial payers typically reimburse hospitals at a higher rate than Medicare and Medicaid.
- Medicare spending on hospital services grew 6% last year, driven in part by increased outpatient hospital use in the program. That's compared with 1.5% growth in hospital spending the year before.
Where it stands: Momentum is building in Congress for policy changes that decrease spending on hospitals and particularly their outpatient clinics. But hospitals have so far successfully fought back against substantial changes, which they say would end up destabilizing care.
- There's also more attention being paid to private equity ownership of health systems, which is frequently blamed for putting profits ahead of patients.
- Chip Kahn, CEO of the Federation of American Hospitals, said the spike wasn't a surprise and reflected pent-up demand and deferred care following the pandemic that "led many patients to present sicker and needing more complex treatment."
Zoom out: Retail prescription drug spending grew by more than 11% last year, also a substantial increase from its growth the year before.
- Increased uptake of diabetes and obesity drugs contributed to the jump, and also boosted spending for private health insurance and Medicare, the analysis found.
