August 1, 2022 – Based on a research brief from Altarum, national healthcare spending has declined for the first time in 60 years in the first quarter of 2022.
The CMS National Health Expenditure Accounts said that from 1960 to 2020, healthcare spending growth has been positive and greater than economy-wide inflation. Healthcare spending growth was flat in 2021 and even declined in Q1 of 2022.
According to the research, the slow growth in healthcare prices is likely a result of government policies and delays in contract negotiations. HCPI is projected to rise as 2022 prices reflect higher negotiated rates for care.
Medical spending as a percent of personal consumption expenditures (PCE) peaked at 20.8 percent in 2019 and fell to 19.5 percent in Q1 2022. This figure likely shifted in 2020 before real healthcare spending dropped because healthcare providers received federal funds in response to the COVID-19 pandemic, which are included in real healthcare spending.
“Decreasing the long-term trajectory of healthcare spending in the US has been a longstanding goal of policymakers and business leaders, and these new data in some ways indicate a short period of success in this arena,” the brief stated. “However, despite indications of a slowing healthcare cost trend over the past 18 months, many of these impacts are expected to be short-lived.”