This chart collection explores National Health Expenditure (NHE) data from the Centers for Medicare and Medicaid Services (CMS). These data offer insights into changes in health spending over time in the U.S., as well as the driving forces behind spending growth. The data specifically show how healthcare spending changed in 2023. A related interactive tool contains more of the latest NHE data.
Total health expenditures increased rapidly in 2023
Health spending totaled $74.1 billion in 1970. By 2000, health expenditures had reached about $1.4 trillion, and in 2023 the amount spent on health more than tripled to $4.9 trillion. In the first year of the COVID-19 pandemic, health spending accelerated by 10.4% from 2019 to 2020. Health spending increased by 7.5% from 2022 to 2023, faster than the 4.6% increase from 2021 to 2022. The growth in total health spending from 2022 to 2023 is well above the average annual growth rate of the 2010s (4.1%).
Total health expenditures represent the amount spent on health care and related activities (such as administration of insurance, health research, and public health), including expenditures from both public and private funds.
In the chart above, spending is shown in terms of both nominal dollar values (not inflation-adjusted) and constant 2023 dollars (inflation-adjusted based on the personal consumption expenditures (PCE) index). Adjusting for economywide inflation, national health spending increased 3.6% in 2023 from the previous year. The federal actuaries deflate health spending in their report using an aggregate of healthcare-specific consumer and producer price indices for specific commodities or services. Using the NHE deflator, real national health expenditures increased by 4.4% from 2022 to 2023.
Annual per person health spending reached $14,570 in 2023
On a per capita basis, health spending has increased in the last five decades from $353 per year in 1970 to $14,570 per year in 2023. In constant 2023 dollars, the increase was from $2,151 in 1970 to $14,570 in 2023.
Health spending as a share of GDP increased in 2023
The share of the gross domestic product (GDP) devoted to healthcare reached 19.5% in 2020, an uptick from prior years as health spending increased and GDP decreased. In 2021, total national health expenditures as a share of GDP fell to 18.3% as the economy recovered and health spending increased moderately. The share of GDP that is health spending fell further to 17.4% in 2022 as GDP growth, driven by general inflation, continued to outpace growth in health spending. Health spending once again grew faster than GDP in 2023, resulting in a slight uptick in the share of GDP spent on healthcare to 17.6%. Since 2022, health spending has represented a similar share of the economy as it did prior to the COVID-19 pandemic.
Health spending growth slowed in recent decades but consistently exceeded GDP until 2020
From 1970 through 1980, the average annual per capita growth in the U.S. economy was 9.3% per year, compared to per capita health spending growth of 12.0%. Although health spending growth rate has since moderated, it generally continues to outpace growth of the economy. After a period of recession during the first year of the COVID-19 pandemic, the economy recovered in 2021. Since 2020, GDP per capita has increased at an average rate of 8.7%. Per capita national health expenditures increased by 5.1% on average from 2020 to 2023.
Since 2020, retail prescription drugs spending has grown faster than hospital and physician service spending
During the 1970s, growth in hospital expenditures outpaced other services, while prescriptions and physicians/clinics saw faster spending growth during the 1980s and 1990s. From 2020 to 2023, retail prescription drugs experienced the fastest growth in spending at 8.6%, following 3.3% average annual growth from 2010 to 2020. Average spending growth for hospitals and physicians/clinics between 2020 and 2023 was 6.2% and 6.3%, respectively.
Hospital and physician services represent half of total health spending
Hospital spending represented close to a third (31.2%) of overall health spending in 2023, and physicians/clinics represented 20.1% of total spending. Prescription drugs accounted for 9.2% of total health spending in 2023.
Per capita out-of-pocket expenditures increased in 2023
Out-of-pocket expenditures increased in 2023, averaging $1,514 per capita (out-of-pocket medical costs do not include the amount individuals contribute toward health insurance premiums).
In 2023, real out-of-pocket spending also increased from the previous year from $1,472 to $1,514. This was mainly caused by growth in out-of-pocket spending for hospital care, physician and clinical services, and nursing care facilities, which collectively accounted for 33% of all out-of-pocket spending in 2023.
Health insurance represents about 73% of total health consumption expenditures
Private health insurance accounted for the largest share of national spending on health consumption expenditures in 2023 (30.1%). Public health insurance programs managed in part by CMS, Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP), accounted for 43.0% of all health consumption spending.
Health insurance is a growing share of total health expenditures and out-of-pocket spending is a smaller portion than in 1970
Private insurance expenditures now represent 30.1% of total health spending (up from 20.4% in 1970), and public insurance (which includes Medicare, Medicaid, CHIP, and the Veterans Administration and Department of Defense), represented 43.0% of overall health spending in 2023 (up from 22.0% in 1970). Although out-of-pocket costs per capita have increased, compared to previous decades, they now make up a smaller share of total health expenditures.
On a per enrollee basis, private insurance spending continues to grow faster than Medicare and Medicaid spending
Per enrollee spending by private insurers grew by 80.4% from to 2023 — much faster than both Medicare and Medicaid spending growth per enrollee (50.3% and 30.3%, respectively). Generally speaking, private insurance pays higher prices for healthcare than Medicare and Medicaid.
Per enrollee Medicaid spending rose by 9.7% in 2023 from the previous year, mirrored by continued increases in private insurance and Medicare (5.9% and 7.1% respectively). Medicare and private insurance per enrollee spending continued to grow faster in 2023 after slower growth from 2020 to 2022. Medicaid per enrollee spending had previously declined in 2021 as total enrollment grew, particularly among children and non-elderly adults, who generally have lower per enrollee spending.
Per enrollee spending varied in 2023 across payers
On a per enrollee basis, the average annual growth of Medicare spending was similar to that of private insurance over the course of the 1990s and 2000s. Average annual spending growth per enrollee in Medicaid was similar to growth for Medicare and private insurance in the 1990s but slowed in the 2000s. After a decade of slower growth for all major payers in the 2010s, per enrollee spending increased only marginally for Medicaid, but more substantially for Medicare (5.2% growth) and private insurance (7.2%).
Almost half of health spending in the U.S. is by federal, state, and local governments
Public and private health spending have both continued to grow in the past few decades. Public spending in 2023 represented just under one-half (48%) of overall spending after briefly exceeding private spending in the first year of the pandemic. Public sector spending includes spending on insurance programs, such as Medicare and Medicaid, as well as other government spending, such as spending on public health and research.
Federal spending on public health decreased for the third straight year in 2023 but remains above pre-pandemic levels
Spending on public health fell again sharply from 2022 to 2023, driven by the expiration of the COVID-19 public health emergency in 2023. Federal public health spending decreased by 58.3%, from $90.2 billion to $37.6 billion from 2022 to 2023. Meanwhile, state and local public health spending grew by 5.1%, in line with previous growth.
Health insurance and administrative costs has increased for decades but may be leveling off
In 2023, administrative expenses – which include the cost of administering private insurance plans and public coverage programs but not the administrative costs of health providers – represented 7.4% of total national health expenditures for the second year in a row, down from a peak of 8.3% in 2020.
Health utilization increased in 2023 at a rate similar to pre-pandemic
Health services spending is generally a function of prices (e.g., the dollar amount charged for a hospital stay) and utilization (e.g., the number of hospital stays). In 2023, healthcare prices increased by 2.3%, in line with previous years, while health services use increased by 6.1%, higher than typical pre-pandemic utilization increase levels.
Growth in price and utilization of pharmaceuticals has varied over the past two decades
Due to the way drugs are selected for inclusion in the price index, it can take some time for new drugs to be reflected in the data. The price index for drugs grew steadily from the mid-1990s (ranging in growth from about 1% to 5% annually) before briefly declining around 2020. It increased by 3.6% between 2022 and 2023.
The growth in pharmaceutical product utilization between in 2023 (6.5%) was higher than the rates seen throughout much of the 2010s, though in line with growth in 2019 and 2020.
National health spending per capita jumped 7% in 2023 while general economic price inflation slowed
Health spending per capita increased greatly, to 7.0% in 2023, up from 4.2% in 2022. The personal consumption expenditure (PCE) price index (inflation) grew 3.8% in 2023, a lower increase than was seen in previous years. In 2023, prices for food, energy, and motor vehicles stabilized, but prices of health care spending increased, potentially lagging from previously high PCE inflation, as healthcare prices had remained steady. Since many provider payment contracts are set in advance, there is a lag in health sector prices reflecting the inflation in labor, goods, and services.