Total health expenditure

Total health expenditure is estimated to reach $5.4 trillion in 2025, reflecting ongoing growth in the healthcare sector. Expenditure is expected to rise by 6.4% in 2025, underpinned by factors such as increased demand for medical services, inflation in medical costs, expanding insurance coverage, and continued advancement in medical technologies. The United States continues to maintain a high level of health spending, which is closely tied to both its economic development and demographic shifts, as well as persistent inefficiencies in healthcare delivery and financing.

Over the five years to 2025, national health expenditure has trended upward at an average annualized rate of 5.6%. The onset of the COVID-19 pandemic in 2020 led to a sharp increase of 10.6% in health expenditure, primarily due to surges in demand for emergency care, long-term treatments, and increased public health spending. The subsequent development and distribution of coronavirus vaccines and boosters in 2021 helped moderate hospitalizations, but healthcare spending remained elevated in the aftermath. There was a 4.1% increase in total expenditure in 2022 as federal public health funding rose, partly offsetting expiring COVID-19 funding. Throughout the period, the discovery of lasting effects of the coronavirus continued to support high healthcare utilization and additional costs. Healthcare reform stemming from the Patient Protection and Affordable Care Act (PPACA) continued to expand insurance coverage, with mechanisms such as health insurance exchanges and related tax credits increasing access and utilization, even as some states declined to expand Medicaid coverage. Socioeconomic factors, particularly the close link between wealth and healthcare expenditure, persisted, with developed countries like the United States exhibiting higher spending as medical advances supplied new treatments and technologies. Structural inefficiencies in healthcare delivery and financing, along with lower out-of-pocket expense requirements, contributed to further medical cost inflation.

Total health expenditure has experienced steady growth over the past five years, shaped by the cumulative effects of pandemic response, ongoing reform initiatives, and underlying demographic and economic drivers. Rising insurance coverage, increased public funding, persistent medical inflation, and continued uptake of technology and therapeutics remain key contributors to growth in national healthcare spending during this period.