New NHE data show the true picture of health care spending

Last week, the Centers for Medicare & Medicaid Services (CMS) released National Health Expenditures (NHE) data that show net prices for retail prescription medicines declined, on average, by 0.1% in 2020. The latest facts on health care spending also show that total retail prescription drug spending grew at a modest 3.0% in 2020, below the previous year’s growth. The data, which also look at spending on other health sectors, further reiterate why policymakers need to look across the entire health care system when looking to lower health care spending:

• Overall U.S. health care spending increased 9.7% to reach $4.1 trillion in 2020. This growth was primarily driven by federal spending to help address COVID-19.
  
  
• Total retail prescription drug spending in 2020 grew more slowly than in the previous year. Spending growth for retail drugs was entirely due to increased utilization. In total, retail prescription drugs accounted for just 8.4% of total U.S. health care spending in 2020.
  
  
• Hospital spending grew 6.4% in 2020 and accounted for 31% of total health care spending, similar to the sector’s growth and share in 2019. Hospital spending represented $1.3 trillion of all health care spending last year.
  
  
• Physician and clinical services spending increased 5.4% in 2020. Spending on these services accounted for 20% of total health care spending and was bolstered by COVID-19 relief programs.

Learn more at phrma.org/cost.