5 Key Facts About Rising Healthcare Spending in the United States
Healthcare spending in the United States is a key driver of the nation’s growing debt and has again increased — reaching $5.3 trillion in 2024. Data from the National Health Expenditure Accounts released by the Centers for Medicare and Medicaid Services (CMS) reveal important insights about why healthcare spending is rising and what it means for our fiscal condition, budget, and economy. Below are five key takeaways from the most recent data healthcare spending in the United States.
1. Healthcare spending increased by 7.2 percent in 2024, surpassing $5 trillion for the first time.
Total spending on healthcare (both private and public) increased by 7.2 percent in 2024 after a 7.4 percent increase in 2023. Adjusting for inflation, that growth was 4.4 percent from 2023 to 2024.
Two main factors that drive healthcare spending are utilization rates of services and prices of those services. CMS attributes more of the health spending increase in 2024 to higher utilization rates than to increases in medical prices. In 2024, use of healthcare services increased by 5.4 percent after a 6.1 percent increase from 2023. The increased use of healthcare services was somewhat higher than health insurers anticipated; there was a surge in utilization in 2023 after people sought out delayed care following the COVID-19 pandemic, but that was expected to be temporary. Average healthcare spending per person also increased 6.1 percent to $15,474 in 2024 for the same reasons.
2. Healthcare costs as a share of the economy are similar to pre-pandemic levels.
Relative to the size of the economy, healthcare spending in 2024 totaled 18.0 percent of gross domestic product (GDP) — up from 17.7 percent in 2023. While that is an increase compared to the previous year, it is still lower than the record highs from 2020 and 2021 due to the COVID-19 pandemic; it indicates that healthcare spending relative to GDP is returning to the pre-pandemic trend.
3. Public payers accounted for 43 percent of healthcare spending.
Through Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), the Department of Veterans Affairs (VA), and the Department of Defense (DoD), public payers accounted for 43 percent of all national health expenditures in 2024. That total is approximately the same share as the previous year but is 21 percentage points more than its share in 1970. Within the most recent years of available data, gross Medicare spending grew from $1.0 trillion in 2023 to $1.1 trillion in 2024 — a 7.8 percent increase. Medicaid spending (both federal and state expenditures) increased by 6.6 percent, from $874 billion to $932 billion. CHIP, VA, and DoD combined for $199 billion in spending in 2024.
4. Healthcare costs per capita outpaced than inflation.
Healthcare spending per capita increased 6.1 percent from 2023 to 2024 while the personal consumption expenditure price index (a measure of inflation in expenditures for goods and services, including healthcare services paid by insurance or out-of-pocket) grew 2.6 percent in 2024. That means the healthcare costs per capita outpaced overall inflation, though healthcare prices and subsequent costs typically lag behind overall inflation because healthcare payment contracts are established in advance. Per capita costs are also influenced by utilization rates, which were higher than expected in 2024.
5. The uninsured population grew for the first time since 2019, rising 11.1 percent from 2023.
Following years of decreases in the number of uninsured people, the population jumped to 28.0 million in 2024 from 25.2 million in 2023. Policies enacted during the COVID-19 pandemic to prohibit states from disenrolling Medicaid beneficiaries, regardless of eligibility, expired in 2023. As a result, Medicaid enrollment dropped by nearly 8 million from 2023 to 2024. While some of the disenrolled have obtained other forms of coverage, many are now likely uninsured. People without insurance are more than twice as likely to delay or forgo healthcare due to cost, but when they do seek care — such as emergency services — approximately 80 percent of the costs are covered by public funds.
Healthcare spending continued to grow in 2024 as utilization rates increased and prices for health services outpaced overall inflation. The share of healthcare spending as a percentage of the economy is projected to rise even more over the next decade, putting more pressure on the federal budget and everyday Americans. Understanding trends in healthcare spending can help policymakers find reform options that will reduce costs while maintaining quality of care.
Data visualizations have been provided by the Peterson-KFF Health System Tracker, a partnership between the Peterson Center on Healthcare and KFF to monitor U.S. healthcare system performance on dimensions including quality and cost.
Photo by Spencer Platt/Getty Images
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