A Sustainable Path for Health Care Spending

In 2022, the U.S. spent $4.5 trillion on health care. That is 17.3 percent of the nation’s economic output or gross domestic product (GDP), down from 18.2 percent in 2021. This decrease largely reflects a leveling off from 2020, when health care made up 19.7 percent of GDP during the pandemic.

Official estimates project national health spending will grow an average of 5.1 percent annually from 2021-2030. Projections indicate GDP will grow, on average, at the same rate, so national health spending will account for 19.6 percent of GDP in 2030, about the same proportion as in 2020.

Recent increases in health care spending are a function of growth in both unit prices (how much providers charge for their services) and utilization (how much care consumers are accessing and using). Growth in unit prices of health care services is attributable to many factors, including the advent of new technologies, consolidation across the health care sector, a lack of transparency around pricing decisions, and unchecked market-driven pricing. The rise in utilization is affected, in part, by an aging population. As Americans live longer—in 2012, there were 38.5 million adults ages 55 and older, compared to 41 million in 2022—many are acquiring more chronic and other health conditions requiring care.

While the US spends considerably more per person on health care than other developed countries, often twice as much, improvements in health outcomes have not risen alongside the growth in spending. In fact, the US continues to lag behind on many health indicators, including ones important to midlife adults, such as prevalence of multiple chronic conditions, unmanaged diabetes, and heart attack mortality.