2020 Edition — Health Care Costs 101

US Spending Growth Relatively Steady in 2018

Katherine Wilson, Wilson Analytics


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National health spending growth accelerated in 2018, with total US health spending exceeding $3.6 trillion. That translates to $11,172 of health spending per person, more than twice the rate of most other developed countries. Health spending accounted for 17.7% of the economy in 2018, down slightly from 17.9% due to strong economic growth. Looking ahead, national health spending is projected to grow at an average rate of 5.4% per year from 2019 to 2028, faster than the economy’s 4.3% projected growth. By 2028, health care spending is expected to reach $6.2 trillion and account for nearly one-fifth of GDP.

Health Care Costs 101: US Spending Growth Relatively Steady in 2018 provides a detailed look at national health care spending in 2018, as well as projections for the next decade, based on data published by the US Centers for Medicare & Medicaid Services. Please note that these projections were made before the onset of the COVID-19 pandemic.

(Visit CHCF’s interactive infographic to find out who has paid for health care over the past 50 years.)

Who paid for health care over the past 50 years? Learn more.
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Key findings include:

    • Medicare spending is projected to increase as the population ages — it accounted for $1 in $5 spent on health care in 2018 and will account for $1 in $4 spent on health care in 2028.
    • Public health insurance, including Medicare and Medicaid, paid 41% of the health bill in 2018. Private insurance paid 34%, and consumers’ out-of-pocket spending accounted for 10%.
    • The “net cost of health insurance”1 was the fastest-growing category of spending, both in 2018 (13.2%) and as measured by its 20-year average (8.6%). This category accounts for 7% of spending.
    • Prescription drug spending totaled $335 billion in 2018 and grew 2.5%, as compared to 1.4% in 2017. While drug prices decreased in 2018, the number of prescriptions dispensed increased.
    • Households and the federal government each accounted for 28% of health spending in 2018. Private business accounted for 20%.
    • Federal subsidies for ACA marketplace (individual coverage) premiums and cost sharing totaled $51 billion, accounting for 5% of federal health spending.

The full report, a quick reference guide, the data file, and all of the charts in the report are available for download below. These materials are part of CHCF’s California Health Care Almanac, an online clearinghouse for key data and analyses describing the state’s health care landscape. See our entire collection of current and past editions of Health Care Costs 101.

Notes

  1. Net cost of health insurance reflects the difference between premiums and benefit costs for private insurance, and includes administrative costs, taxes, and profits.