In 2018, the United States spent about $3.6 trillion on health care, averaging to about $11,172 per person. Health care costs take up a significant portion of the U.S. economy. In 1960, health care costs made up about 5% of the GDP and in 2018, health care costs made up about 18% of GDP.
The United States has one of the highest costs of health care in the world and spends significantly more on health care than other comparable countries around the world. The rising costs are problematic and do not indicate better health outcomes.
Why are U.S. Health Care Costs Rising?
There are several reasons why health care spending is increasing in the United States. The cost of health care can be seen as a function of the price of services and the amount the services are used.
Increase in the Cost of Services
The prices of health care services have increased faster than the cost of other goods and services in the U.S. economy. The average cost of medical care has grown at an average rate of about 3.5% per year. This growth rate is quicker than the growth rate for inflation.
One reason for the rise in health care spending is an aging population, which increases the number of services used. The share of people over the age of 65 in the United States as of 2018 is 16%. According to the U.S. Census Bureau, this number is projected to rise to over 20% by 2030. This is because people today are living longer than before. Because people 65 and older spend more on health care than any other age group, this will result in an increase in total health care costs over time.
Additionally, because of the aging population, Medicare enrollment is expected to increase from 60 million people to 75 million people, which is expected to increase the cost of Medicare as well.
Health Care Spending by State
Health care spending per capita varies by state. The aforementioned two factors, the price of services and the amount the services are used, also affect the average health care spending in each state. Some states have significantly lower prices for seeing a doctor or specialist than other states. Additionally, some states have a higher population of people over 65, also increasing the average costs.
Health care spending per capita in the data provided in this article includes spending for all privately and publicly funded personal health care services and products, including hospital care, physician services, nursing home care, and prescription drugs.
Based on the data provided, Utah has the lowest health care spending per capita of $5,982. This is likely because Utah residents have a median age of 30.7 years. This is the youngest median age of any state in the U.S. With a lower share of people who are in the 65 and older age group, there are fewer health care services being used. Additionally, Utah is one of the five healthiest states overall in the U.S.
The District of Columbia has the highest health care spending per capita of $11,944. Health care costs in the District of Columbia are extremely high. In general, the cost of living in D.C. is very high. According to a report from the Washington Post, one hospital in D.C. reported charging $115,000 for putting a patient on a ventilator. Another hospital charges almost $69,000 for a lower joint replacement. Although insurance may cover most of the costs, the costs of these services are astronomically high and can still cause a great financial burden on the patient and patient’s family.
Below is a table of each state’s per capita spending on health care.