U.S. healthcare spending rose by 7.2% to $5.3 trillion in 2024 from $4.9 trillion in 2023, driven by increased health insurance enrollment and a jump in use of medical services, particularly in private health insurance plans, the U.S. Centers for Medicare & Medicaid Services said Wednesday.
CMS said healthcare spending accounted for 18% of U.S. gross domestic product in 2024, up from 17.7% in 2023 and outpacing U.S. economic growth.
The agency oversees Medicare plans for people aged 65 and older or with disabilities, and Medicaid for low-income Americans.
Spending on government administration including services involving Medicaid and Medicare, had the biggest increase, rising 14.7% in 2024 from a 7.8% increase a year earlier.
The agency said changes in Medicaid coverage after COVID-era policies lapsed were a big contributor to the higher administrative costs, with Medicaid government administration costs alone increasing 19.8% in 2024 after a 9.2% rise in 2023.
Spending on services provided by non-medical or dental professionals and home healthcare followed, with increases of 10.8% and 10.2%, respectively.
CMS said hospital pricing also contributed to elevated spending in 2024, increasing 3.4%, the highest rate since 2007. Spending on hospital care services totaled $1.6 trillion, rising 8.9%, a deceleration in growth from 10.6% in 2023.
Affordable Care Act enrollment in 2024 increased over 30% to 21.1 million people from 16.2 million in 2023.
Overall private health insurance enrollment, which includes Obamacare plans, increased 3.5% in 2024 to 214.3 million people covered from 207 million in 2023.
A 2024 special enrollment period that allowed people who had been kicked off Medicaid to enroll in ACA plans also contributed to increases in Obamacare enrollment, the agency said.
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