2021 Edition — Health Care Costs 101

US Spending Growth Outpaces Economy

Katherine Wilson, Wilson Analytics


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Health Care Costs 101: US Spending Growth Outpaces Economy provides a detailed look at national health care spending in 2019, just prior to the onset of the COVID-19 pandemic.

National health care spending increased 4.6% in 2019 to $3.8 trillion, growing faster than both the economy (4.0%) and consumer prices (1.8%). The 2019 increase was similar to its growth of 4.7% in 2018. In 2019, health care spending accounted for 17.7% of the economy and averaged $11,582 per person, more than twice the amount spent by most developed countries.

(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.
Visit infographic.

Key findings about US health spending in 2019 include:

  • As in prior years, hospital and physician care remained the largest spending categories, accounting for 31% and 20%, respectively, of health care spending followed by prescription drugs at 10%.
  • Home health care had the largest growth rate in 2019, increasing by 7.7%.
  • The net cost of health insurance category — which includes administrative costs and profit — declined 3.8% in 2019 largely due to the suspension of the health insurance providers tax.1 Over the past 20 years, the net cost of health insurance was the fastest growing category of spending, with an annual average growth rate of 7.7%.
  • Public health insurance ($1.6 trillion), which includes Medicare ($799 billion) and Medicaid ($613 billion), paid for 41% of all spending, while private health insurance ($1.2 trillion) paid for 31%.
  • Medicare spending grew 6.7% in 2019, driven by growth in both enrollment (2.6%) and per enrollee spending (4.0%). It outpaced growth by private health insurance (3.7%), Medicaid (2.9%), and other payers.
  • The federal government and households financed similar shares (29% and 28%, respectively) of the nation’s health care bill. The largest expenses for households were out-of-pocket spending and contributions to employer-sponsored health insurance.
  • Federal subsidies for ACA marketplace (individual coverage) premiums and cost sharing totaled $50 billion in 2019, financing 5% of private health insurance 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. The Affordable Care Act Provision 9010 established the health insurance providers fee, implemented in 2014.