CMS attributes the rapid growth in 2023 to "non-price factors" including the use and intensity of healthcare services.

The nation's healthcare expenditures hit $4.9 trillion in 2023, increasing by 7.5%, up sharply from recent post-COVID annual expenditures and rising to $14,570 per person, federal actuaries reported Wednesday.

The analysis by the Office of the Actuary at the Centers for Medicare and Medicaid Services, published online Wednesday in Health Affairs, showed that growth in 2023 was markedly higher than the post-COVID 4.6% rate of growth in 2022, and 4.6% in 2021, but also well below the 10.6% growth in 2020 when the coronavirus pandemic raged.

Healthcare’s share of the economy was 17.6% in 2023, in line with 17.4% in 2022, but lower than during the pandemic years in 2020 and 2021. 

CMS attributed the accelerated growth in 2023 to "non-price factors," including the use and intensity of healthcare services that were made available owing to strong enrollment in commercial insurance and Medicaid, with 92.5% of the U.S. population covered.

When adjusted for inflation, using the National Health Expenditure deflator, real healthcare spending increased 4.4% in 2023—up from 4.1% in 2022 and higher than the growth rate of 2.9% of the gross domestic product in 2023.

The overall GDP grew 6.6% in 2023, after dramatic volatility during the pandemic that saw the GDP shrink by 0.9% in 2020, followed by increases of 10.9% and 9.8% in 2021 and 2022, respectively. Even with that volatility in both healthcare spending and GDP growth, CMS notes that the growth rates were similar during 2020–23, at 6.6% per year and 6.5% per year, respectively.

Of the $14,570 in per person health spending in 2023, CMS says the federal government accounted for 32% ($4,689 per person). Households paid for 27% ($3,942 per person), private businesses accounted for 18% ($2,677 per person), state and local governments another 16% ($2,279 per person), and other private revenues the remaining 7% ($983 per person)

Spending by Source of Funds

• Private Health Insurance (30% share): Spending for private health insurance reached $1.5 trillion in 2023 and increased 11.5%. The robust growth in 2023 was driven by increased enrollment in Marketplace and employer-sponsored private health insurance plans, strong growth in spending for goods and services, and strong growth in the net cost of insurance. In 2023, enrollment in private health insurance increased 1.6%, or by 3.3 million individuals. 

• Medicare (21% share): Medicare spending reached $1 trillion in 2023, increasing 8.1% following 6.4% growth in 2022. This faster growth was driven by a turnaround in traditional fee-for-service spending growth (from a decline of 1.4% in 2022 to an increase of 1.7% in 2023). Medicare Advantage private plan spending continued to experience rapid growth (increasing 14.7% in 2023 following 15.7% growth in 2022) and accounted for 52% of total Medicare expenditures in 2023 (from a 39% share in 2019). Total Medicare enrollment grew 2.1% in 2023, a slight acceleration from 2022 when enrollment increased 1.9%. 

• Medicaid (18% share): Medicaid spending increased 7.9% to $871.7 billion in 2023, a slower growth rate than in 2022 (9.7%) and 2021 (9.5%). In 2023, Medicaid enrollment increased 0.8%, following growth of 7.5% in 2022, and reached 91.7 million, even as states resumed the re-determination of Medicaid eligibility (also referred to as “unwinding”) following the end of pandemic-era coverage protections. 

• Out-of-Pocket (10% share): Total out-of-pocket spending increased by 7.2% in 2023 to $505.7 billion, a slight acceleration from growth of 6.9% in 2022. Hospital care, physician and clinical services, and nursing care facilities and continuing care retirement communities, which collectively accounted for 33% of all out-of-pocket spending in 2023, were the main contributors to the faster growth in 2023. 

Spending by Service or Product

• Hospital Care (31% share): Spending for hospital care services increased 10.4% in 2023 to reach $1.5 trillion. This rate of growth was the fastest since 1990, when hospital spending increased 10.8%. Faster growth in 2023 was driven by non-price factors (which include the use and intensity of services), with an increased number of hospital discharges and increased Medicare outpatient hospital utilization.  

• Physician and Clinical Services (20% share): Spending for physician and clinical services increased 7.4% to $978 billion in 2023, which was faster than the growth rate of 4.6% in 2022. Faster growth in 2023 was driven by non-price factors (which includes use and intensity of services), while price growth remained low at 0.6%.  

• Retail Prescription Drugs (9% share): Retail prescription drug spending increased 11.4% to $449.7 billion in 2023, accelerating from a rate of 7.8% in 2022. The rapid growth in spending for drugs used to treat diabetes and obesity contributed to faster overall growth in retail prescription drug expenditures.  

Eight-in-10 surveyed provider execs say the rise in payer denials is 'brazen' and 'intentional.'

Friction between health systems and payers has worsened over the past three years, a new survey finds, with 80% of provider CFOs accusing the plans of "intentional or systematic efforts to increase denials."

The report from the Healthcare Financial Management Association found that nearly six-in-10 CFOs surveyed for "Bridging the Payer-Provider Divide" say their relations with payers are deteriorating.

The CFOs didn't hold back, describing the high rates of payer denials and claim adjudication errors as "dirty tactics," "brazen" and "shocking." Surging denials have led 75% of respondents to add financial services staff in the past three years to manage the process.

In sharp contrast, health plan executives reviewing the findings claim payer-provider relations are strong, and they point to value-based care initiatives as evidence.

So, where's the disconnect?

"Hospitals and health plans engaged in value-based payment initiatives have had some success in developing collaborative working relationships," says Richard L. Gundling, who leads HFMA's content and professional practice.

"But on the fee-for-service side, the tenor of these relationships has deteriorated as providers' frustration levels with payers' administrative requirements and expectations have increased."

About 64% of CFOs say it's too early to tell what effect AI will have on dealings with payers, and another 29% expect AI to make matters worse. Increased payer transparency around payment rules and behaviors was cited by 75% of respondents as the primary change that could strengthen their organization's payer relationships.

About 87% of CFOs say strained relations with health plans hurts care delivery and that patients often blame them instead of payers for delays and coverage denials.

The report offers ideas for building stronger payer-provider connections.

It's the third consecutive month for the healthcare sector to see healthy but cooling job creation.

Healthcare created 45,000 jobs in September, rebounding somewhat from the outlier 36,300 jobs created in August, but still 21% lower than the 57,000 jobs the sector averaged over the past 12 months, federal data show.

It's the third consecutive month for the healthcare sector to see healthy but cooling job creation. Even with the slowdown, healthcare accounted for 18% of the 245,000 jobs created in the U.S. economy in September.

The growth was seen primarily in home healthcare services, (13,000) and hospitals (12,000), BLS reports. Employment rose in nursing home and residential care services, which added 9,000 jobs.

There were 17.8 million workers in the healthcare sector in September, an increased of 676,000 since September 2023, BLS data show.

The 254,000 new jobs created in the overall economy in September surpassed analysts' expectations and is well-above the 202,000 jobs created on average over the past 12 months.

The unemployment rate in the larger U.S. economy was little changed at 4.1%, BLS says, with 6.8 million people reporting as unemployed in September. These numbers are higher than in September 2023, when the jobless rate was 3.8%, and the number of unemployed people was 6.3 million.

The average hourly earnings for all employees on private nonfarm payrolls in September rose by 13 cents (0.4%) to $35.36. Over the past 12 months, average hourly earnings have increased by 4%. In September, the average hourly earnings of private-sector production and nonsupervisory employees rose by 8 cents (0.3%) to $30.33.

The biggest job maker in September was food service, which created 69,000 new jobs, up a staggering 492% from its 12-month average of 14,000 jobs. Government grew 45,000 jobs, including 29,000 at the state and local levels. Construction created 25,000 jobs, above the 19,000 new jobs the sector averaged over the past 12 months.

August and September job numbers are considered preliminary by BLS, and subject to revision. July job growth was revised upwards from 89,000 to 144,000 jobs. August job growth was revised up 17,000 to 159,000, and the combined revision for the two months means that there are 72,000 more jobs than previously reported, BLS says.

More than 1.7 million patient injuries and 83,000 deaths have been linked to defective medical equipment over a 10-year span.

The Food and Drug Administration is building a surveillance platform as part of its ongoing and decade-long effort to monitor potential safety issues arising from faulty medical devices.

The project — the status of which was updated this week in a report from the Government Accountability Office — is a response to the more than 1.7 million injuries and 83,000 deaths that have been potentially linked to faulty medical devices over a 10-year span in the U.S., FDA data show.

The surveillance will include everything from implantable pacemakers to surgical masks for medical devices used by tens of millions of Americans.

Tapping data from electronic health records, billing claims, pharmacy and other sources, the FDA surveillance will begin by Decemober 2024 with a few devices and expand over time.

In 2012, Congress ordered the FDA to establish an active post-market surveillance system for medical devices. However, major sticking points have included a lack of funding, and problems tracking patients' unique device identifiers.

To encourage the use of unique device identifiers, the agency may use advertising to explain the benefits to health systems. In addition, the agency has estimated current and future active surveillance costs and is searching for alternative funding sources.

The FDA’s efforts to monitor potentially defective medical devices dates to 2012, and so far have included:

• Establishing a coordinating center in 2016 to partner with FDA to organize a network of data sources (health systems and other collaborators);
   
• Completing in 2021 the cloud-based data infrastructure necessary to collect evidence of medical device performance while protecting patient privacy; and
   
• Planning active post-market surveillance of two medical devices by December 2024, with plans to expand over 5 years.