In the recent year, U.S. health spending saw an increase of 4.1%, reaching a total of $4.5 trillion. The rate of growth is more akin to the period before the pandemic. The healthcare sector’s share in the national economy has seen a noteworthy shift. The portion of the nation’s gross domestic product (GDP) dedicated to health care decreased for the second consecutive year, a significant shift from the long-standing trend of health expenditures consuming a more considerable part of the GDP.
During the height of the COVID-19 pandemic in 2020, health spending accounted for a record 19.5% of GDP. However, this percentage fell to 17.3% in 2022. The rise in healthcare prices was relatively moderate compared to the overall inflation in the economy, with healthcare inflation recorded at 3.2% in 2022, compared to the general inflation rate of 7.1%.
Prescription Drug Expenses Surge Amidst Healthcare Transition
Government programs and long-term contracts cover a significant part of healthcare costs. These typically adjust payment rates more slowly than private market prices. The expenditure on retail prescription drugs significantly outpaced the overall growth in health spending, increasing by 8.4% in 2022, exceeding $400 billion. This was mainly driven by high-priced diabetes and obesity medications.
The healthcare system is gradually moving beyond the extreme conditions experienced during the Covid crisis. This transition impacts various companies, including Pfizer Inc., which experienced a boom due to the high demand for COVID-19 vaccines and treatments.
Post-Pandemic Adjustments in U.S. Health Spending
Despite the continuous growth in U.S. health spending, the rate of growth has normalized compared to the pandemic period. Simultaneously, the sector’s share in the national economy is slightly decreasing. The report also emphasizes the significant increase in medication costs, particularly for prescription drugs.
The most significant points highlighted are the normalization of health spending growth rates, a decrease in the GDP share dedicated to healthcare, and a significant increase in retail prescription drug expenditure. The healthcare system is gradually adjusting to post-Covid conditions, impacting various healthcare companies. However, the rising cost of medication, particularly prescription drugs, remains a concern.
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