Healthcare spending is still on the rise, according to a new analysis from the Health Care Cost Institute (HCCI). Median per person healthcare spending increased by 24 percent from 2017 through 2021, HCCI’s latest Healthy Marketplace Index shows.

But healthcare spending varied significantly depending on where people lived. For example, patients in metropolitan areas with the highest utilization rates paid nearly three times more for healthcare services that year compared to their neighbors in metropolitan areas with the lowest utilization rates.

Rising medical prices impacted healthcare spending, with overall spending growth reflecting a 9 percent increase in prices, on average, and 14 percent increase in service use, on average.

The American Medical Association (AMA) reports health spending in the U.S. increased by 2.7% in 2021 to $4.3 trillion or $12,914 per capita. This growth rate is substantially lower than 2020 (10.3% percent). This substantial deceleration in spending can be attributed to the decline in pandemic-related government expenditures offsetting increased utilization of medical goods and services that rebounded due to delayed care and pent-up demand from 2020.

Although physician services was the second largest category of health spending, prior to the pandemic, spending on physician services generally grew more slowly than spending in the other large categories of personal health care. Physician spending grew by an average of 3.8% per year between 2009 and 2019 while hospital services (4.5%) and clinical services (6.6%) had higher growth rates.

In 2020, spending on physician services grew 7.0%, a substantially higher growth rate compared to previous years. This acceleration was driven by spending on federal relief programs (classified as “other federal programs” in the following chart). Spending growth decreased to 5.1% in 2021 as the decline in pandemic-related government expenditures offset the rebound in utilization of medical goods and services.

A Health Affairs study from May 2022 found that vertical consolidation – for example, health systems buying physician practices – resulted in a 12 percent increase in primary care physician prices and a 6 percent increase in specialist prices. Research has also shown similar price increases when markets experience horizontal consolidation, which is when hospitals merge or acquire other hospitals.

Hospital markets tended to be less concentrated in larger metropolitan areas, such as San Franciso, New York City, and Philadelphia. Meanwhile, according to HCCI’s analysis, the most concentrated areas were metropolitan areas with populations of less than 350,000 in 2021. The most concentrated areas included Johnson City, Tennessee, Kingsport, Tennessee, and Wilmington, North Carolina.

HCCI notes that a potential factor in market consolidation is the degree to which patients from one metropolitan area seek care in a neighboring region.

Healthcare spending is only expected to rise, with the latest healthcare spending projections from federal actuaries estimating healthcare to account for nearly 20 percent of gross domestic product (GDP) by 2031.

HCCI’s Healthy Marketplace Index provides interactive reports in which readers can compare prices and hospital market concentration across metropolitan areas.