More data is pointing to concerns of skyrocketing healthcare costs in the upcoming years.
Steeper medical utilization is one cause for concern, according to several sources. Meanwhile, HR 1 is radically reshaping Medicaid, and the expiration of ACA enhanced subsidies risk more people going uninsured.
Here are eight things to know about U.S. healthcare spending:
1. The U.S. is slated to spend nearly $9 trillion on healthcare by 2034, according to CMS projections in Health Affairs.
2. In 2024, the country spent $5.3 trillion on healthcare, or 18% of total GDP.
3. Personal healthcare spending made up 85.4% of that 2024 sum. This included $1.6 trillion for hospital care, $829 billion for physician services, $467 billion for prescription drugs and $280.7 billion for clinical services. Clinical services had the fastest average annual growth of those components over the past decade, up 6.8%, according to an American Medical Association analysis of CMS data.
4. In 2024, health insurance encompassed 73.7% of healthcare spending. Private health insurance is consistently the greatest contributor, covering $1.6 trillion in 2024. Medicare trailed at $1.1 trillion, followed by Medicaid at nearly $932 billion.
5. Looking at sponsors — where the money originates — the federal government was the largest sponsor of healthcare spending in 2024, covering 31.3%, followed by households financing 27.6%, private businesses financing 18.3%, and state and local governments financing 16.3%. The rest came from other private sponsors.
6. Healthcare EBITDA as a percentage of national health expenditures dropped to 8.9% in 2024 from 11.2% in 2019. It is projected to fall to 8.7% in 2027, according to a January McKinsey report.
7. Commercial healthcare costs are expected to increase 9% in 2027, the highest medical cost trend in almost two decades, a PwC report said in June.
8. That same report said 70% of health plans consider AI-enabled tools for capturing provider revenue as a top-three inflator.
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