The United States spent $5.3 trillion on healthcare in 2024, which works out to $15,474 per person. That figure represents 18% of the entire economy, meaning roughly one in every five dollars produced in the country goes toward health-related costs. No other nation comes close to this level of spending, either in total dollars or as a share of GDP.
How Fast Spending Is Growing
Healthcare spending grew 7.2% in 2024, nearly matching the 7.4% jump in 2023. Both years were driven by increased demand for medical services as people returned to routine care and procedures that had been delayed. What stands out is that healthcare spending is consistently growing faster than the overall economy, which is why its share of GDP keeps climbing. In 2022, healthcare represented 17.3% of GDP. By 2024, it had reached 18.0%.
Federal actuaries project this gap will continue. Over the decade from 2023 to 2032, healthcare spending is expected to grow at an average rate of 5.6% per year, compared to 4.3% for the broader economy. If those projections hold, healthcare will consume nearly 19.7% of GDP by 2032.
Where the Money Goes
Hospital care is the single largest category, accounting for about 30% of all healthcare spending. In 2022 (the most recent year with a full category breakdown), that totaled $1.4 trillion. Hospitals are expensive because they bundle together facility costs, equipment, staffing around the clock, and the most resource-intensive procedures in medicine.
Physician and clinical services make up the next largest share at roughly 20%, or about $885 billion. This includes office visits, outpatient procedures, and specialist consultations. Retail prescription drugs account for about 9% of total spending, reaching $406 billion in 2022 after rising from $291 billion in 2014. Per capita drug spending climbed an average of 3.8% per year over that period, reaching $1,227 per person. Notably, most of that growth came from higher prices per dose rather than people filling more prescriptions.
The remaining spending spreads across nursing care facilities, dental services, home health care, medical devices, public health programs, and research.
Who Pays for It
The cost is split between public programs and private sources, with the government covering slightly more than half. Medicare, the federal program for adults 65 and older and some people with disabilities, is the largest single payer. Medicaid, which covers low-income individuals through a federal-state partnership, is the second largest public payer. Together, these two programs account for a massive portion of annual spending and are the fastest-growing segments of the federal budget.
Private health insurance, mostly provided through employers, covers a large share of the working-age population and their families. Out-of-pocket costs, meaning what you pay directly through copays, deductibles, and uncovered services, make up a smaller but still significant piece. For many households, those direct costs are the most visible and painful part of the system.
Chronic Disease Drives Most Spending
The single biggest factor behind the total price tag is chronic illness. According to the CDC, 90% of the nation’s annual healthcare expenditures go toward people with chronic and mental health conditions. That includes heart disease, diabetes, cancer, obesity-related complications, respiratory diseases, and depression, among others. These conditions require ongoing management: regular doctor visits, daily medications, lab work, and, in many cases, hospitalizations.
This concentration of spending means that a relatively small number of very sick patients account for an outsized share of the total. It also means that investments in prevention, such as reducing smoking rates, improving diet, and increasing physical activity, have an enormous potential payoff in reduced healthcare costs over time.
Administrative Costs Add Up
A substantial portion of U.S. healthcare spending never touches a patient. Roughly 20% to 25% of all healthcare dollars, approximately $1 trillion per year, goes toward administrative services. That includes billing, coding, claims processing, prior authorizations, credentialing, and the overhead required to navigate a system with hundreds of different insurance plans, each with its own rules.
At the hospital level specifically, administrative expenses averaged 17% of total hospital costs across more than 5,600 facilities studied. This is significantly higher than administrative costs in countries with simpler payment systems. The complexity of the U.S. insurance landscape, where providers must interact with dozens of payers using different forms, approval processes, and reimbursement rates, is a major reason costs run so high. Every doctor’s office needs staff dedicated to paperwork that would be unnecessary in a single-payer system.
How Much Is Wasted
A landmark analysis published in JAMA estimated that waste accounts for a significant slice of total healthcare spending. One category alone, overtreatment or low-value care (tests, procedures, and treatments that provide little or no benefit to the patient), was estimated to cost $76 billion to $101 billion per year. That includes unnecessary imaging scans, antibiotics prescribed for viral infections, and surgeries performed when watchful waiting would produce the same outcome.
Overtreatment is just one of several waste categories. Others include administrative complexity, fraud, pricing failures, and care delivery failures. The researchers estimated that even modest, targeted reforms could save tens of billions annually. For overtreatment specifically, achievable savings ranged from $13 billion to $29 billion per year, without any reduction in care quality.
How This Compares Globally
The U.S. spends roughly twice as much per person on healthcare as other high-income countries like Germany, France, Canada, and Australia. Those nations typically spend between 9% and 12% of GDP on health. Despite this spending gap, the U.S. does not consistently achieve better health outcomes. Life expectancy is lower, infant mortality is higher, and rates of preventable death are worse than in most peer nations. The difference is not primarily about how much care Americans receive, but about how much that care costs: higher prices for the same drugs, higher salaries for specialists, higher hospital charges, and far higher administrative overhead.