U.S. health spending rose 4.1% to $4.5 trillion last year, an annual growth level more typical of pre-pandemic times.

The nation’s health-care tab—the collective spending of governments, businesses and households—took up a smaller portion of the overall economy for the second straight year, according to data published Wednesday from the Centers for Medicare and Medicaid Services.

That’s a reversal of a decades-long trend, when each year health expenditures would account for a greater share of gross domestic product. In 2020, when Covid-19 pandemic relief measures collided with a sharp recession, the measure topped out at a record high 19.5%. It fell to 17.3% in 2022.

The health sector’s proportion of overall GDP shrunk partly because health-care prices rose at a slower pace than prices in the broader economy. Health-care inflation was 3.2% in 2022, compared to 7.1% overall, the researchers said.

Much of health care is paid for by government programs or long-term contracts, where payment rates change more slowly than private market prices.

Medication costs outpaced the growth in total health spending. Spending on retail prescription drugs rose by 8.4%, to more than $400 billion, in 2022, partly driven by uptake of high-priced diabetes and obesity medications. 

Wednesday’s report is another piece of evidence the health-care system is moving past the extreme days of the Covid crisis. That shift has hit companies, including vaccine-maker Pfizer Inc., which boomed as people rushed to get shots and drugs to treat the respiratory virus.

The results were published in the journal Health Affairs.

This article was provided by Bloomberg News.