That is according to the 2024 national health expenditure data published in Health Affairs last week (Hartman et al. 2026). Here is the abstract:
Health care spending in the US reached $5.3 trillion and increased 7.2 percent in 2024, similar to growth of 7.4 percent in 2023, as increased demand for health care influenced this two-year trend. As in 2023, the use and intensity of health care goods and services continued to grow rapidly in 2024, particularly for hospital care, physician and clinical services, and retail prescription drugs. The insured share of the population remained relatively high in 2024, at 91.8 percent, after its peak in 2023 of 92.5 percent. Health care spending growth continued to outpace overall economic growth in 2024, and as a result, the health care share of the economy increased from 17.7 percent in 2023 to 18.0 percent in 2024.
What is driving health care spending: price or utilization? After accounting for changes in population growth, both factors matter but health care utilization matters more.
Growth in medical prices accounted for 2.5 percentage points of the per capita increase in 2024, whereas growth in nonprice factors such as use and intensity of health care goods and services accounted for 3.6 percentage points of the increase…Both of these factors increased at a faster rate than their average growth during 2014–19 (1.4 percent and 2.7 percent, respectively), which preceded the COVID-19 pandemic.
Mark Chernew has a commentary (“It’s Not The Prices, Stupid“) which highlights the key drivers of increased spending and ponders how the advent of AI in medicine is likely to impact healthcare costs in the future.
Prescription drug spending went up by 7.8% which outpaced health care spending overall (7.2%). This spending increase was lower than in 2023. Was this because of increased drug prices? The answer is actually ‘no’. In part because the number of innovative new medications declined in 2024.
…overall retail prescription drug spending grew more slowly than in 2023, when it was 10.8 percent, in part because of slower growth in retail prescription drug prices (which increased 1.4 percent in 2024, compared with 2.3 percent in 2023 as well as slower growth in the use of medicines, as the number of prescriptions dispensed (based on a thirty-day supply) increased 2.5 percent in 2024 after growth of 2.9 percent in 2023.
In addition, the number of new active substances launched decreased from sixty-five in 2023 to forty-eight in 2024—the lowest number of new active substances since 2019
Pharmaceutical spending is increasingly shifting to third party payers. The Inflation Reduction Act, put out-of-pocket maximums for Part D drugs, which shifted costs from patients to Part D plans.
The IRA included provisions that reduced cost sharing for insulins and vaccines in 2023 and eliminated beneficiaries’ 5 percent coinsurance in the catastrophic coverage phase of the benefit and expanded eligibility for Part D low-income subsidies in 2024…Mainly because of these factors, out-of-pocket retail prescription drug spending (a 12 percent share) declined 0.9 percent in 2024 (after 2.2 percent growth in 2023)
You can read the full article here.
