National healthcare spending in the United States has climbed to $5.3 trillion, representing about 18% of the nation’s gross domestic product, and hospitals are the largest contributor to the recent surge in costs. A new analysis from KFF finds that hospital care accounted for 40% of the growth in national health spending between 2022 and 2024. For organizations across the revenue cycle, including hospitals, collection agencies, and healthcare lenders, the findings highlight how hospital pricing and utilization trends are shaping the broader financial environment surrounding medical debt.
Total national health expenditures increased by $692 billion from 2022 to 2024. Hospital care alone accounted for $277 billion of that growth. Hospitals also represent a large share of total healthcare spending overall. In 2024, hospital expenditures made up roughly one third of all healthcare spending nationwide.
Hospital spending also grew faster than the healthcare sector overall during the past two years:
- Hospital spending increased 10.6% in 2023, compared with 7.4% overall healthcare spending growth
- In 2024, hospital spending rose 8.9%, while national health spending increased 7.2%
Researchers say several factors contributed to this increase. One driver was a rebound in the use of healthcare services after the COVID-19 public health emergency suppressed demand for certain procedures and visits. Increased utilization and intensity of care both contributed to higher spending.
Prices also played a role. Hospital prices increased 2.7% in 2023 and 3.4% in 2024, marking the fastest hospital price growth recorded since 2007.
KFF noted that price growth reflects both public and private insurance payments. However, commercial insurance prices have historically increased faster than prices paid by Medicare and Medicaid.
Other healthcare spending categories
While hospitals drove the largest share of spending growth, several other categories also contributed:
- Physician and clinical services: 22% of spending growth
- Retail prescription drugs: 11% of growth
- Home health care and nursing care: each accounted for about 5%
- Dental services, government administration, and other services: smaller shares
Spending on government public health activities actually declined by about 7%, largely because pandemic-related public health programs have been winding down.
Long-term trends
The KFF report also highlights how hospital spending has expanded over the past two decades. Hospital expenditures increased from $609 billion in 2005 to $1.6 trillion in 2024, representing a $1 trillion increase over that period.
CMS projections suggest the trend will continue. Hospital spending is expected to represent an increasing share of the economy in the coming years, with healthcare spending overall projected to reach more than 20% of GDP by 2033.
For organizations involved in healthcare finance and collections, the continued growth in hospital spending underscores the broader pressures driving medical bills higher for patients, insurers, employers, and public programs.
