U.S. Healthcare Spending Soars: What's Driving the Rise?

U.S. healthcare spending climbed by 7.5% to $4.9 trillion in 2023, primarily driven by increased healthcare utilization and higher enrollment in private health plans, notably those under the ACA. The CMS report highlighted significant spending growth due to prescription drugs and hospital care services exceeding GDP growth.

Healthcare expenditures in the United States surged by 7.5% to reach $4.9 trillion in 2023, fueled by a rise in medical service use and higher enrollment in private health plans, especially those under the Affordable Care Act, according to a recent report by the Centers for Medicare and Medicaid Services.

The report indicates that healthcare spending has significantly outpaced U.S. economic growth. Notably, prescription drug spending increased by 11.4%, largely due to popular weight-loss and diabetes medications. Medicare prescription drug costs alone soared by 12.2%, driven by a 35% spike in diabetes medicine expenses.

Furthermore, hospital care spending hit $1.5 trillion, marking the highest growth in nearly thirty years. Clinical services and commercial insurers also saw substantial increases. ACA enrollment rose significantly after policy shifts, with overall insurance coverage reaching 92.5% of Americans in 2023.

(With inputs from agencies.)