U.S. health care spending reaches $4.9 trillion in 2023

Americans spent $4.9 trillion on health care in 2023, amounting to $14,570 per person, according to the U.S. Centers for Medicare & Medicaid Services (CMS). Health care spending rose 7.5% from the previous year, driven by increased service use, private insurance enrollment, and higher prescription drug costs.

Health care accounted for 17.6% of the U.S. economy in 2023, returning to pre-pandemic levels after peaking at 19.5% during COVID-19. About 92.5% of Americans had some form of health insurance coverage. Private insurance spending rose 11.5% to $1.5 trillion, boosted by higher enrollment in Affordable Care Act Marketplaces and employer-sponsored plans.

Medicare spending increased 8.1% to $1 trillion, with growth fueled by Medicare Advantage plans, which comprised 52% of Medicare expenditures. Medicaid spending grew 7.9% to $871.7 billion, though enrollment slowed after pandemic-era coverage protections ended.

Out-of-pocket spending rose 7.2% to $505.7 billion, with hospital and physician services driving much of the increase. Prescription drug spending surged 11.4% to $449.7 billion, largely due to antidiabetes drugs and higher brand-name drug prices.

Hospital care costs saw their fastest growth since 1990, rising 10.4% to $1.5 trillion, reflecting higher patient volumes and service intensity.