National health spending grew 2.7% last year, according to data released by the Centers for Medicare and Medicaid Services Wednesday evening.

National health expenditures reached $4.3 trillion, averaged out to $12,914 per person, though the spending growth was slower than the 10.3% increase in 2020. CMS attributed the slower growth to a decline in federal COVID-19 spending, adding that this more than offset the impact of greater use of healthcare goods and services as well as insurance coverage in 2021.

Spending associated with COVID-19 supplemental funding, including the Provider Relief Fund and the Paycheck Protection Program, and other related federal programs declined 62.7% year-over-year, falling from $193.1 billion to $71.9 billion. 

“The trends in health care spending in 2021 are linked to the many unique impacts of the COVID-19 pandemic, including the substantially reduced federal COVID-19 supplemental and public health expenditures and an increase in the use of health care goods and services as people sought care at a higher rate than in 2020,” Anne B. Martin, an economist in the CMS Office of the Actuary, wrote in Health Affairs. 

The three services that accounted for the largest amount of healthcare spending last year were hospital care (31% share), physician and clinical services (20% share) and retail prescription drugs (9%). 

Spending on retail prescription drugs rose 7.8% to $378 billion, far exceeding the 3.7% growth rate reported in 2020. CMS attributed this accelerated growth to an increase in the use of prescription drugs. 

As it relates to health spending by funding sources, private health insurance led the way with a 28% share, followed by Medicare at 21%, Medicaid at 17% and out-of-pocket spending at 10%. 

Notably, the number of uninsured Americans declined for the second consecutive year as Medicaid and private health insurance enrollment increased. 

The U.S. gross domestic product increased 10.7% in 2021 after contracting in 2020 and healthcare’s share of the economy fell from 19.7% to 18.3% during the same period. Still, CMS noted that this is still higher than the 17.6% share reported in 2019.