U.S. Health Care Costs Surge Past $5 Trillion as Coverage Expansion and Service Use Drive Spending

Federal data show U.S. health care spending climbed to $5.3 trillion in 2024, growing faster than the economy and reflecting higher enrollment, administrative costs, and increased use of medical services.

By yourNEWS Media Newsroom

U.S. health care spending rose 7.2% to $5.3 trillion in 2024, up from $4.9 trillion in 2023, fueled by expanded insurance enrollment and increased use of medical services, particularly within private health insurance plans, according to new figures released Wednesday by the Centers for Medicare & Medicaid Services.

CMS said total health care expenditures accounted for 18% of U.S. gross domestic product in 2024, up from 17.7% the previous year, marking a pace of growth that exceeded overall economic expansion.

The agency, which administers Medicare for Americans aged 65 and older and people with disabilities as well as Medicaid for low-income individuals, reported that government administration costs posted the largest increase among major spending categories. Spending tied to administration, including services related to Medicaid and Medicare, rose 14.7% in 2024, nearly doubling the 7.8% increase recorded in 2023.

CMS attributed much of that growth to changes in Medicaid coverage following the expiration of pandemic-era policies. Government administrative costs for Medicaid alone jumped 19.8% in 2024, compared with a 9.2% increase the year before, as states processed eligibility reviews and coverage transitions.

Spending on services delivered by non-medical and non-dental professionals also rose sharply, increasing 10.8% in 2024. Home health care spending followed closely, climbing 10.2% during the year, according to the agency.

Hospital-related costs were another significant contributor to overall spending growth. CMS reported that hospital prices increased 3.4% in 2024, the fastest rate since 2007. Total spending on hospital care services reached $1.6 trillion, rising 8.9% over the year. While still elevated, that represented a slowdown from the 10.6% growth recorded in 2023.

Insurance enrollment trends also played a central role in the spending increase. Enrollment in plans offered under the Affordable Care Act rose more than 30% in 2024, reaching 21.1 million people, up from 16.2 million the prior year.

Overall private health insurance enrollment, which includes Affordable Care Act plans, grew 3.5% in 2024 to 214.3 million people covered, compared with 207 million in 2023.

CMS said a special enrollment period in 2024 contributed to the jump in Affordable Care Act participation. The enrollment window allowed individuals who lost Medicaid coverage as pandemic protections ended to sign up for ACA plans, increasing the number of people transitioning into private insurance coverage.

The agency said the combined effects of coverage shifts, administrative demands, higher service use, and rising prices drove health care spending growth in 2024, pushing total expenditures further above the $5 trillion mark.