Dec 17, 2020 - Health

The U.S. spent $3.8 trillion on health care last year

Data: Centers for Medicare & Medicaid Services; Chart: Axios Visuals

The U.S. spent $3.8 trillion on health care last year, accounting for about 18% of the entire American economy, according to new federal data.

Why it matters: The U.S. has by far the most expensive health care system in the world, and every year it eats up a little more — from the federal government, states, employers and individuals.

By the numbers: Total national health expenditures rose by 4.6% in 2019, according to the Centers for Medicare & Medicaid Services.

  • That’s a modest increase by the standards of health care spending, although it outpaced inflation.
  • Hospitals remain the most expensive part of the system: The U.S. spent about $1.2 trillion on hospital care last year — nearly one-third of all health spending.
  • These figures include Medicare, Medicaid, private health insurance and out-of-pocket costs.

The intrigue: 2019 defied some historical norms about health care spending.

  • Typically, rising prices are the bigger driver of overall spending increases. Last year, however, prices took a backseat — increases in the use of medical services accounted for a bigger share of the rise in spending.
  • Similarly, private insurance usually sees much greater increases in per-person spending than government programs. But that, too, flipped on its head in 2019; Medicare’s per-person spending increased by 4%, compared to 3.2% for private insurance.

What’s next: These 2019 figures predate the coronavirus pandemic.

  • Early estimates suggest that the pandemic may have actually caused health care spending to fall this year — which makes sense, given that most elective procedures were completely shut down in the spring, but won’t last beyond the pandemic.
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