AnalysisThe 10-Year Explosion: How Medicare Spending Grew by $15.5B
Published February 2026 · 13 min read
Key Finding
Medicare Part B physician payments grew 20% from 2014 to 2023— from $78.2B to $93.7B. At this rate (2.0% CAGR), spending will reach $107.9B by 2030.
The Growth Trajectory
Every year between 2014 and 2019, Medicare Part B spending crept upward. Then COVID-19 hit, and 2020 saw spending plummet -10% as elective procedures were cancelled and patients avoided doctors' offices. But the recovery was swift — by 2021, spending had already surpassed 2019 levels. By 2023, it hit a new record.
The COVID Crater and Recovery
The 2020 dip is the most dramatic event in modern Medicare history. Spending fell from $89.5B to $80.5B — a $9.0B drop in a single year. Per-provider payments dropped to $74.2K, the lowest in the decade.
But 2021 saw a dramatic snapback: spending surged to $91.5B, as patients returned for deferred care, telehealth became normalized, and COVID testing and treatment added new billing categories.
Drug Spending: The Fastest-Growing Category
The real growth story in Medicare isn't office visits — it's drugs. Part B drug spending (physician-administered drugs like injections and infusions) grew 123% over the decade, from $6.2B in 2014 to $13.9B in 2023.
Drug spending's share of total Medicare Part B jumped from 7.9% to 14.8%. At this trajectory, drugs alone could account for 20%+ of Medicare physician payments by 2030.
More Providers, Less Per Person
The number of Medicare providers grew by 237.1K (25%) over the decade — from 938.1K to 1.2M. But per-provider payments actually fell 4%, from $83.4K to $79.7K per year.
This means the spending growth is driven by more providers entering the system, not individual providers billing more. The pie is growing, but each slice is getting thinner.
Projecting Forward: 2030
At the current compound annual growth rate of 2.0%, Medicare Part B physician payments would reach $107.9B by 2030. That's $14.1B more than today.
And that's just physician payments. Total Medicare spending (Parts A, B, C, and D combined) is projected to exceed $1 trillion by 2030. The question isn't whether Medicare spending will keep growing — it's whether the growth is delivering better outcomes for the 68 million Americans who depend on it.