Healthcare spending in the United States surged by 7.5% to $4.9 trillion in 2023, driven by increased medical service use and rising enrollment in private health plans, according to a report from the Centers for Medicare and Medicaid Services (CMS). The growth rate outpaced U.S. economic expansion, which was 2.9% in 2023 when adjusted for inflation.
Prescription drug spending saw the sharpest rise, increasing by 11.4% to $449.7 billion, compared to a 7.8% rise in 2022. The use of weight-loss and diabetes medications, particularly GLP-1 drugs like Novo Nordisk’s Ozempic and Wegovy, contributed significantly. Spending on these medications under Medicare’s prescription drug benefit surged by 35%, driving Medicare’s overall drug spending up by 12.2%.
Healthcare spending accounted for 17.6% of the U.S. economy in 2023, up from 17.4% in 2022. Although slightly lower than during the peak of the COVID-19 pandemic, this still represents a significant portion of GDP.
Hospital care services expenditures totaled $1.5 trillion in 2023, marking a 10.4% increase—the largest jump in nearly 30 years. Spending on clinical services also grew by 7.4%.
Commercial insurers represented the largest portion of healthcare spending, rising to 30% from 19.5% in 2022. This growth was fueled by increased enrollment in employer-sponsored plans and Affordable Care Act (ACA) plans, known as Obamacare. Enhanced subsidies from the 2021 American Rescue Plan Act and the 2022 Inflation Reduction Act made ACA plans more affordable, leading to 2.7 million additional enrollees in 2023.
Private health insurance enrollment grew by 1.6%, covering 3.3 million more Americans. Overall, 92.5% of Americans had some form of health insurance in 2023, up from 92.0% in 2022, reflecting broader coverage across the population.
The report underscores the growing demand for medical services and prescription drugs, alongside the financial challenges of managing healthcare spending in the U.S.
