National Healthcare Spending in the United States
National healthcare spending in the United States amounted to $4.464 trillion in 2022 and was mostly funded by Federal health programs and private health insurance – although more than 10% of national healthcare spending in 2022 was attributable to “out of pocket” expenses for copays, deductibles, and services not covered by insurance.
A breakdown of national healthcare spending in the United States is published annually by the Centers for Medicare and Medicaid Services (CMS). The breakdown – known as the National Health Expenditure Account (NHEA) – details expenditures by various criteria including per capita, consumption type, and payer type, and is used to predict future national healthcare spending in the United States.
In most reports based on the NHEA, per capita spending is analyzed net of “non-personal costs” such as non-commercial research, government administration, and government public health activities. This allows researchers, business leaders, and policymakers to make more accurate budgeting and supply decisions based on granular analyses of factors such as age, gender, and location.
The analyses by consumption and payer type can be either net of non-personal costs or – as used in this article – inclusive of non-personal costs. Net analyses provide contextual pictures of national healthcare spending in the United States, while inclusive analyses better identify trends and inconsistencies in how healthcare spending differs by payer type.
National Healthcare Spending in the United States Explained
The total “inclusive” amount of national healthcare spending in the United States consists of health consumption expenditures, funds invested in medical sector structures and equipment (i.e., new hospitals, medical equipment, and software systems), and the cost of non-commercial research to procure health services in the future.
Health consumption expenditures include spending on hospital care, physician services, dental services, home health care, and retail outlet sales of medical products (i.e., prescription drugs). The figure also includes the cost of administering government health programs such as Medicare and public health activities such as epidemiological surveillance programs.
One further figure included in the total amount of national healthcare spending in the United States is the “net cost of health insurance”. The net cost of health insurance figure is the difference between the amount collected in health insurance premiums and the amount paid in benefits and includes amounts deducted from the difference for additions to reserves, taxes, fees, and underwriting losses.
Trends in National Healthcare Spending Since 1960
The interactive image below demonstrates how national healthcare spending in the United States has increased since 1960 by expenditure type. Notable events to consider when reviewing the image include high inflation in the 1970s and 1980s, and the COVID-19 pandemic in 2020. The background colors represent presidential affiliations.
The default option for the image below is “All” elements of national healthcare spending in the United States. This enables users to hover over any element for any year and identify the percentage change in expenditures. For more precise data, the options exist to select:
- National Health Expenditures (NHE) = % Change in Total National Healthcare Spending per Year.
- Health Consumption Expenditures (HCE) = NHE less Investments in Structures, Equipment, and Research.
- Personal Health Care = HCE less Administration Costs, Public Health Costs, and the Net Cost of Health Insurance.
- Government Administration and the Net Cost of Health Insurance.
- Government Public Health Activities.
- Investments in Structures, Equipment, and Research.
Healthcare Spending by Consumption and Payer Type
The purpose of analyzing healthcare spending by consumption and payer type is to identify inconsistencies in healthcare spending per payer type. While some inconsistencies in the “out of pocket” category are understandable, other inconsistencies catch the eye – for example, the percentage paid in 2022 by Medicaid for “Other Health, Residential, and Personal Care”.
Total Healthcare Spending 2022
| Year and Type of Expenditure | Total | |
| Year 2022 | $ Billions | Percentage |
| Hospital Care | 1355.0 | 30.35% |
| Physician and Clinical Services | 884.9 | 19.82% |
| Other Professional Services | 140.6 | 3.15% |
| Dental Services | 165.2 | 3.70% |
| Other Health, Residential, and Personal Care | 246.5 | 5.52% |
| Home Health Care | 132.9 | 2.98% |
| Nursing Care Facilities and Continuing Care Retirement Communities | 191.3 | 4.28% |
| Prescription Drugs | 405.9 | 9.09% |
| Durable Medical Equipment | 67.1 | 1.50% |
| Other Non-Durable Medical Products | 115.4 | 2.58% |
| Government Administration | 54.2 | 1.22% |
| Net Cost of Health Insurance | 279.4 | 6.26% |
| Government Public Health Activities | 208.4 | 4.67% |
| Research | 64.8 | 1.45% |
| Structures and Equipment | 153.0 | 3.43% |
| 4464.6 | 100.00% | |
It is not surprising the total national healthcare spending in the United States is dominated by hospital care, physician services, and prescription drugs. What may upset contributors to private health insurance and taxpayers is that $279.4 billion (“Net Cost of Health Insurance”) is sitting in reserves or spent on fees, rather than being used for the delivery of health care.
Private Health Insurance 2022
| Year and Type of Expenditure | Private Health Insurance | |
| Year 2022 | $ Billions | Percentage |
| Hospital Care | 485.9 | 37.66% |
| Physician and Clinical Services | 342.0 | 26.52% |
| Other Professional Services | 41.1 | 3.18% |
| Dental Services | 68.0 | 5.27% |
| Other Health, Residential, and Personal Care | 15.9 | 1.23% |
| Home Health Care | 18.6 | 1.44% |
| Nursing Care Facilities and Continuing Care Retirement Communities | 18.1 | 1.40% |
| Prescription Drugs | 154.9 | 12.01% |
| Durable Medical Equipment | 14.0 | 1.09% |
| Other Non-Durable Medical Products | ||
| Government Administration | ||
| Net Cost of Health Insurance | 131.4 | 10.19% |
| Government Public Health Activities | ||
| Research | ||
| Structures and Equipment | ||
| 1289.8 | 100.00% | |
There are no surprises in the analysis of private health insurance spending for 2022. However, when compared against previous years, there is a 15% increase in the amount spent on home health care. Rather than being attributable to an aging population, the increase is due to increased staffing costs in a sector of healthcare heavily impacted by the COVID-19 pandemic.
Medicare Healthcare Spending 2022
| Year and Type of Expenditure | Medicare | |
| Year 2022 | $ Billions | Percentage |
| Hospital Care | 353.0 | 37.38% |
| Physician and Clinical Services | 234.0 | 24.78% |
| Other Professional Services | 39.4 | 4.17% |
| Dental Services | 6.1 | 0.65% |
| Other Health, Residential, and Personal Care | 4.1 | 0.43% |
| Home Health Care | 47.4 | 5.02% |
| Nursing Care Facilities and Continuing Care Retirement Communities | 42.2 | 4.47% |
| Prescription Drugs | 129.8 | 13.75% |
| Durable Medical Equipment | 14.2 | 1.50% |
| Other Non-Durable Medical Products | 2.5 | 0.26% |
| Government Administration | 14.0 | 1.48% |
| Net Cost of Health Insurance | 57.6 | 6.10% |
| Government Public Health Activities | ||
| Research | ||
| Structures and Equipment | ||
| 944.3 | 100.00% | |
Medicare healthcare spending in 2022 saw modest $ amount increases in every type of expenditure. The consistent nature of Medicare national healthcare spending in the United States will provide a valuable baseline to measure the impact of Medicare reforms introduced in the Inflation Reduction Act 2022, which are due to take effect between 2023 and 2025.
Medicaid Healthcare Spending 2022
| Year and Type of Expenditure | Medicaid | |
| Year 2022 | $ Billions | Percentage |
| Hospital Care | 262.6 | 32.59% |
| Physician and Clinical Services | 110.1 | 13.67% |
| Other Professional Services | 10.6 | 1.32% |
| Dental Services | 17.0 | 2.11% |
| Other Health, Residential, and Personal Care | 149.3 | 18.53% |
| Home Health Care | 46.9 | 5.82% |
| Nursing Care Facilities and Continuing Care Retirement Communities | 58.5 | 7.26% |
| Prescription Drugs | 45.3 | 5.62% |
| Durable Medical Equipment | 9.6 | 1.19% |
| Other Non-Durable Medical Products | ||
| Government Administration | 30.9 | 3.84% |
| Net Cost of Health Insurance | 64.9 | 8.06% |
| Government Public Health Activities | ||
| Research | ||
| Structures and Equipment | ||
| 805.7 | 100.00% | |
By comparison, Medicaid national healthcare spending in the United States was immediately impacted in 2022 by the passage of the American Rescue Plan Act. The Act provided qualifying states with up to $37 billion in additional spending for Home and Community-Based Service waivers – accounted for above under “Other Health, Residential, and Personal Care”.
Out-of-Pocket Expenses 2022
| Year and Type of Expenditure | Out-of-Pocket Expenses | |
| Year 2022 | $ Billions | Percentage |
| Hospital Care | 35.5 | 7.51% |
| Physician and Clinical Services | 67.3 | 14.28% |
| Other Professional Services | 33.1 | 7.02% |
| Dental Services | 66.6 | 14.13% |
| Other Health, Residential, and Personal Care | 7.8 | 1.65% |
| Home Health Care | 15.4 | 3.28% |
| Nursing Care Facilities and Continuing Care Retirement Communities | 48.3 | 10.25% |
| Prescription Drugs | 56.7 | 12.03% |
| Durable Medical Equipment | 27.8 | 5.90% |
| Other Non-Durable Medical Products | 112.9 | 23.95% |
| Government Administration | ||
| Net Cost of Health Insurance | ||
| Government Public Health Activities | ||
| Research | ||
| Structures and Equipment | ||
| 471.4 | 100.00% | |
The takeaway from the analysis of out-of-pocket expenses is that many Americans do not have dental insurance. This situation is likely to worsen in subsequent years’ analyses due to the expiration of the COVID-19 public health emergency and the end of the continuous enrollment programs for Medicaid and CHIP enrollees – potentially affecting 36% of Medicaid recipients.
Other Private Payers
| Year and Type of Expenditure | Other Private Payers | |
| Year 2022 | $ Billions | Percentage |
| Hospital Care | 130.7 | 25.70% |
| Physician and Clinical Services | 86.0 | 16.91% |
| Other Professional Services | 15.8 | 3.11% |
| Dental Services | 2.4 | 0.47% |
| Other Health, Residential, and Personal Care | 66.1 | 13.00% |
| Home Health Care | 3.5 | 0.69% |
| Nursing Care Facilities and Continuing Care Retirement Communities | 17.8 | 3.50% |
| Prescription Drugs | 5.7 | 1.12% |
| Durable Medical Equipment | 1.3 | 0.26% |
| Other Non-Durable Medical Products | ||
| Government Administration | 2.9 | 0.57% |
| Net Cost of Health Insurance | 23.3 | 4.58% |
| Government Public Health Activities | ||
| Research | ||
| Structures and Equipment | 153.0 | 30.09% |
| 508.5 | 100.00% | |
Other third-party payers and programs include worksite healthcare programs provided by employer, workers’ compensation programs, and non-health insurance providers (i.e., auto insurance providers) that cover the cost of hospital treatment or other health care as a secondary benefit of the primary insurance product (also known as General Assistance).
Other Federal Payers
| Year and Type of Expenditure | Other Federal Payers | |
| Year 2022 | $ Billions | Percentage |
| Hospital Care | 87.3 | 19.63% |
| Physician and Clinical Services | 45.5 | 10.23% |
| Other Professional Services | 0.6 | 0.13% |
| Dental Services | 5.1 | 1.15% |
| Other Health, Residential, and Personal Care | 3.3 | 0.74% |
| Home Health Care | 1.1 | 0.25% |
| Nursing Care Facilities and Continuing Care Retirement Communities | 6.4 | 1.44% |
| Prescription Drugs | 13.5 | 3.04% |
| Durable Medical Equipment | 0.2 | 0.04% |
| Other Non-Durable Medical Products | ||
| Government Administration | 6.4 | 1.44% |
| Net Cost of Health Insurance | 2.2 | 0.49% |
| Government Public Health Activities | 208.4 | 46.85% |
| Research | 64.8 | 14.57% |
| Structures and Equipment | ||
| 444.8 | 100.00% | |
The “Other Federal Payers” category covers national healthcare spending in the United States for healthcare outside Medicare and Medicaid programs – for example, the Substance Abuse and Mental Health Services Administration (SAMHSA). This category includes the full amount of spending attributable to “Research”, even though some research may be conducted in the private sector.
National Healthcare Spending in the United States and GDP
As a percentage of Gross Domestic Product (GDP – the monetary value of goods made and services provided by a country within a year), national healthcare spending in the United States is higher than in most other countries in the world (17.3% in 2022). Typically, only countries with much smaller economies spend a comparable percentage of GDP on healthcare.
However, because the Federal contribution to GDP is significantly lower in the United States than in most other advanced economies, US Federal spending on Medicare, Medicaid, and other health programs represents 22.7% of all Federal spending. The closest advanced economies include Germany (10.9%), Japan (9.8%), and the United Kingdom (9.3%).
Future Changes to National Healthcare Spending
Future changes to national healthcare spending are linked to the health of the economy. If unemployment and inflation remain low, a larger proportion of the population will have access to private health insurance and/or be able to incur more out-of-pocket expenses. Should the reverse happen, more of the population will be reliant on Medicaid and other health programs.
There may also be some readjustment of national healthcare spending in the United States due to the expiration of measures introduced to improve access to care during the COVID-19 pandemic – although these may be neutralized by recently announced Medicare and Medicaid reforms, which includes a cap on out of pocket prescription costs for Medicaid beneficiaries.
However, in its National Health Expenditure Projections, CMS predicts an increasing percentage of the population will subscribe to private health insurance, resulting in an average expenditure growth of 5.6% per year and national healthcare spending in the United States increasing to 19.7% of GDP by 2032. You can read why CMS is feeling optimistic in the NHE Projections Forecast Summary.
