Consumer / Employer, Payers

Report: Medicare Spending Reached $744B in 2022

A new KFF analysis showed that Medicare spending per person increased to $15,700 in 2022 from $5,800 in 2000, representing a 4.6% average annual growth.


Medicare spending reached $744 billion in 2022, up from $200 billion in 2000, representing an average annual growth rate of 6.3%, according to a recent KFF report.

Growth in total Medicare spending has been driven in part by an increase in the number of people enrolled in Medicare,” KFF said. “Growth in health care spending per Medicare beneficiary has also contributed to higher total spending. The growth in health care spending is influenced by increasing volume and use of services, new technologies, and rising prices. Looking to the future, these factors will continue to play a role in Medicare spending growth.”

The report relies on information from previous KFF reports, the Centers for Medicare and Medicaid Services, the Congressional Budget Office, the Medicare Payment Advisory Commission, the Social Security Administration, the U.S. Census Bureau and the Board of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds. It was supported by Arnold Ventures.

The analysis showed that Medicare spending per person increased to $15,700 in 2022 from $5,800 in 2000, representing a 4.6% average annual growth.

In 2033, total Medicare spending is expected to reach nearly $1.7 trillion because of the growth in the Medicare population and increases in healthcare costs, KFF said.

“The aging of the population has important implications for future Medicare spending. On a per person basis, Medicare spending is lower for beneficiaries in their 60s and 70s and then rises with age, peaking among beneficiaries in their mid-to-late 90s,” KFF stated. “With more and more adults living into their 80s and beyond, the aging of the population will contribute to higher per beneficiary and total Medicare spending.”

The share of the U.S. population that was 65 years and older in 2020 was 17%. Of that group, 24% were 80 years and older. In 2060, the share of the population who are 65 years and older is expected to be 23%. Of those who will be 65 years and older, 35% will be 80 years and older.

Because the population is aging, there will be more people in the Medicare program, KFF said. In 2020, there were 63 million people on Medicare. This will rise to more than 93 million people in 2060. The totals include adults who are younger who are eligible because of a long-term disability.

Additional findings from the report include:

  • In 2012, hospital inpatient services accounted for 46% of Medicare spending, while physician services and hospital outpatient services accounted for 42% and prescription drug benefits accounted for 12%. In 2022, physician services and hospital outpatient services increased to 48% of Medicare spending, and hospital inpatient services decreased to 40%. Prescription drug benefits stayed the same at 12%.
  • Spending on Medicare Advantage is growing as a share of total Medicare spending. In 2012, Medicare Advantage accounted for 28% of Medicare spending. In 2022, it represented half of Medicare spending, and is anticipated to be 60% of Medicare spending in 2032. This is due to an increase in enrollment in Medicare Advantage plans.
  • Because of increases in Medicare spending, Medicare premiums and deductibles have increased as well.

Photo: designer491, Getty Images