By: TAHP | Friday, December 20, 2024

What’s New: A new annual report shows U.S. health care spending surged by 7.5% in 2023, hitting $4.9 trillion—the largest annual increase in over a decade.

• The 7.5% rise represented a much faster pace of growth than the 4.6% increase in 2022.
• Hospital price hikes, increased prescription drug spending, and growing demand for services are driving this historic rise, leaving Texans with growing financial challenges.

Why It Matters: Rising health care prices are driving up insurance premiums—straining family budgets and employer bottom lines. Employers are increasingly stretched to offer benefits, families are seeing more out-of-pocket costs, and taxpayers are footing the bill for safety net health care programs. Without action to address out-of-control prices, premiums will keep pushing higher, making coverage even harder to afford.

The Numbers Don’t Lie: Health care spending continues to skyrocket:

• $4.9 trillion: Total U.S. health care spending, up 7.5% from 2022, driven by hospital price hikes and increased service use.
• 11.4%: Jump in prescription drug spending, pushed by high-cost therapies for diabetes and obesity – GLP-1’s
• 17.6%: Share of the U.S. economy now consumed by health care.
• 8.7%: Increase in hospital spending, primarily from upcoding and price hikes.

Go Deeper: Several factors are driving these cost increases:

• Hospital prices are growing faster than the economy, raising premiums and out-of-pocket costs for families.
• Hospitals are also adding billions of dollars in “facility fees” to medical bills for routine care at outpatient centers.
• Spending on high-cost drugs, including diabetes and obesity therapies, spiked, reflecting a growing reliance on expensive specialty medications.
• Post-pandemic demand for care surged, especially for elective procedures and preventive services.

The Bottom Line: Texans are shouldering the weight of skyrocketing health care prices. Without greater price transparency, fewer health care mandates, and measures to curb excessive prices, families, employers, and taxpayers will continue to face mounting financial pressure.