Health

The Cost of Care

18%of GDP

Health care was 5% of the economy in 1960. It is roughly 18% — about $5.3 trillion — today.

The government has tracked national health spending since 1960, and the trend line is one of the steepest in American economics: from about 5% of GDP then to roughly 18% now, far above any peer nation — yet medical debt is still a leading driver of personal bankruptcy and millions remain uninsured or underinsured. This breaks down where the money actually goes, how spending climbed over six decades, why prices are so high and so opaque, who’s covered and who isn’t, and why fixing it is the policy fight that never ends.

Health spending, % of GDP

18%

5% in 1960 → 18% in 2024 (CMS NHE)

Per person vs. peer nations

~2×

$14,775 vs. ~$7,860 avg (OECD / KFF, 2024)

People with health-care debt

~100M

~41% of adults (KFF)

Avg. employer family premium

$26,993

2025, up from $5,791 in 1999 (KFF)

Uninsured rate

8.2%

~27M people, 2024 (Census)

Where the money actually goes

The United States spent $5.3 trillion on health care in 2024 — about $15,474 for every person and 18% of the entire economy. The largest single slice is hospital care (31%, $1.63 trillion), followed by physician and clinical services (20%). Retail prescription drugs are about 9% — though that figure understates total drug spending, because medicines given in hospitals and doctors’ offices are counted inside those categories.

A striking share never touches a patient at all. The net cost of insurance and administration — the overhead, marketing, and profit of running a fragmented multi-payer system — is a category peer nations with single-payer systems barely have. It is one of the main reasons the U.S. spends roughly twice as much per person as comparable countries without better outcomes.

Where the $5.3 trillion goes · 2024

Share of total national health expenditure. Hover for detail.

Hospital care31% · $1.63T

Physician & clinical services20% · $1.11T

Retail prescription drugs9% · $467B

Nursing, home & long-term care8%

Net cost of insurance + gov. admin8%

Public health + investment (R&D, buildings)10%

Dental & other professional services7%

Other medical products & personal care7%

Source: CMS National Health Expenditure Accounts, 2024. Hospital, physician and retail-drug dollars are exact; remaining shares are approximate. "Retail prescription drugs" excludes drugs given in hospitals and clinics — so total drug spending is higher.

Who pays · source of funds

Private health insurance

Mostly employer-sponsored plans.

30%

Medicare

Federal, age 65+ and disabled.

21%

Medicaid

Joint federal-state, low-income.

18%

Out-of-pocket

Deductibles, copays, uncovered care.

10%

Other payers & programs

VA, CHIP, public health, investment, other.

21%

Source: CMS NHE, source-of-funds shares (approximate). Government programs — Medicare, Medicaid, and other federal/state spending — together fund roughly four of every ten dollars.

The core puzzle — why is it so expensive?

The research consensus is blunt: Americans don’t use dramatically more health care than people in peer countries — they pay much higher prices for each unit of it. A day in the hospital, a common procedure, an MRI, a brand-name drug: each costs multiples of what it does in Germany, France, or Japan.

Three structural features drive those prices: provider consolidation (merged hospital systems with leverage over insurers), opacity (almost no one can see a price before care, and the same procedure carries different negotiated rates by payer), and administrative complexity (a multi-payer maze that consumes overhead at every step). The tabs that follow trace how this grew, who runs it, and why changing it is so hard.