The US healthcare system continues to smash records (not the good ones) and remains the most expensive healthcare system in the world. In 2023, it spent an incredible $4.8 trillion, a figure outpacing the nation’s economic growth.
How can the US keep up with those numbers? It can’t. Read on to find out more.
Breaking Down the Spending
Healthcare spending in the US will increase – there’s no doubt. The average health expenditure per capita should rise to $15,074. Some states are dominant – like New York and Washington DC – spending more on physician recruiting, hospital care, prescription drugs, and the Medicaid and Medicare programs.
Spending on Medicare should increase by 8.4% to over $1 trillion, while in the case of Medicaid spending, a growth of 5.7% to $852 billion is forecasted over the next few years. One of the biggest reasons for this is the increasing healthcare insurance coverage in the country, which was at 93% in the year 2023.
Prescription drugs are also an issue – the expenditure was at a rate of 8.4% in 2022.
Chronic Conditions
Chronic diseases are a massive issue in the US – 42% of the population has two or more chronic conditions compared to just over 25% in the UK. And the UK doesn’t exactly have a healthy population. These conditions include heart disease, cancer, diabetes, obesity, etc, which are all massive expenses.
90% of the $4.8 trillion spent every year goes to treatments of chronic diseases and mental health disorders. For example, the treatment of diabetes alone had an economic cost of $413 billion in 2022. The cost of heart disease and stroke treatment sat at around $254 billion.
These diseases are increasing in number – we’re at more than a critical point with it.
Projections and Economic Impact
Healthcare spending in the US will reach growth of 5.2% or more in 2024 and, on average, 5.6% between 2023 and 2032. In 2032, the share of healthcare costs in GDP is projected to increase to 19.7%, compared to 17.3% in 2022. The rapid acceleration in expenditures creates worries about how all this can be sustained – if anything, we’d say that’s absolutely unattainable without going into more excessive debt.
New regulations are essential – the Inflation Reduction Act which targeted Medicare consumers was a start. The plan is lengthy, with multiple policies including placing a $2,000 annual cap on out-of-pocket expenses for drugs and allowing Medicare to start negotiating drug prices in 2026.
Some of these measures are likely to reduce the increase in Medicare expenditure growth in the future, though there will be increases in the first few years as new interventions are implemented.
It’s insane to think about how much the US spends on healthcare. And if the number keeps increasing, you have to wonder how the economy will cope. There are some fundamental, massive issues that the government and the public must begin to tackle if the system is to recover, let alone thrive. Let’s see what 2025 brings.
