National healthcare spending reached $5.3 trillion in 2024 as Americans continued consuming healthcare coming out of the coronavirus pandemic, according to a report from CMS actuaries released Wednesday in Health Affairs. Healthcare spending growth continued to outpace that of the overall economy, with healthcare’s share of U.S. gross domestic product increasing from 17.7% in 2023 to 18% in 2024.
The sharp health spending growth was not driven by increasing costs for goods and services but instead was fueled by intense consumer demand for medical care and changes in what types of medical care were consumed. Overall, U.S. healthcare expenditures were up 7.2% in 2024. Taking 2023 and 2024 together yielded the sharpest growth in personal healthcare spending the U.S. has seen in more than three decades, with growth averaging 8.9% per year, a rate not seen since 1991 and 1992 when an economic recession sent personal healthcare skyrocketing.
Hospital care accounted for $1.6 trillion in health spending in 2024, up 8.9% from 2023. Spending on physician and clinical services was up 8.1% and spending on retail drugs was up 7.9%, as demand for GLP-1 drugs for diabetes and weight loss was offset by slowing price growth and fewer new drugs launched. The federal government remained the largest sponsor of U.S. health spending in 2024, accounting for $1.7 trillion or roughly one-third of expenditures, an increase of 5.5% compared to 2023. A major driver of that growth was rising taxpayer burden of more generous subsidies for Affordable Care Act plans, with the U.S. spending $149.5 billion on the ACA marketplaces in 2024, with Washington financing almost four-fifths of that amount.
Medicare continued to be the largest single source of spending, driving 21% of the nation’s total health expenditures in 2024. Medicaid spending growth actually decelerated for Washington as states resumed eligibility checks, but spending per enrollee spiked 16.6% in 2024 compared to 6.5% in 2023, as Americans who remained in Medicaid tended to be sicker and therefore more expensive.
This article is an AI-assisted summary. All facts and figures are drawn from the original report: https://www.healthcaredive.com/news/us-healthcare-spending-2024-cms-health-affairs/809578/