8 things to know about healthcare spending trends

 More data is pointing to concerns of skyrocketing healthcare costs in the upcoming years.

Steeper medical utilization is one cause for concern, according to several sources. Meanwhile, HR 1 is radically reshaping Medicaid, and the expiration of ACA enhanced subsidies risk more people going uninsured.

Here are eight things to know about U.S. healthcare spending:

1. The U.S. is slated to spend nearly $9 trillion on healthcare by 2034, according to CMS projections in Health Affairs.

2. In 2024, the country spent $5.3 trillion on healthcare, or 18% of total GDP.

3. Personal healthcare spending made up 85.4% of that 2024 sum. This included $1.6 trillion for hospital care, $829 billion for physician services, $467 billion for prescription drugs and $280.7 billion for clinical services. Clinical services had the fastest average annual growth of those components over the past decade, up 6.8%, according to an American Medical Association analysis of CMS data.

4. In 2024, health insurance encompassed 73.7% of healthcare spending. Private health insurance is consistently the greatest contributor, covering $1.6 trillion in 2024. Medicare trailed at $1.1 trillion, followed by Medicaid at nearly $932 billion. 

5. Looking at sponsors — where the money originates — the federal government was the largest sponsor of healthcare spending in 2024, covering 31.3%, followed by households financing 27.6%, private businesses financing 18.3%, and state and local governments financing 16.3%. The rest came from other private sponsors.

6. Healthcare EBITDA as a percentage of national health expenditures dropped to 8.9% in 2024 from 11.2% in 2019. It is projected to fall to 8.7% in 2027, according to a January McKinsey report.

7. Commercial healthcare costs are expected to increase 9% in 2027, the highest medical cost trend in almost two decades, a PwC report said in June.

8. That same report said 70% of health plans consider AI-enabled tools for capturing provider revenue as a top-three inflator.

https://www.beckershospitalreview.com/finance/8-things-to-know-about-healthcare-spending-trends/