Where does the U.S. spend most of its health care dollars?

Most national health expenditures in the U.S. are spent on hospital care, which accounts for approximately 31% of total health spending.

Major Spending Breakdown by Service Type

According to data from the Centers for Medicare & Medicaid Services (CMS) National Health Expenditure Data, the largest categories of national health spending include:

• Hospital Care: ~31% of total spending (the single largest category)
• Physician and Clinical Services: ~20% to 21% of total spending
• Retail Prescription Drugs: ~9% of total spending
• Other Health, Administration, and Public Health: ~25%
• Nursing Care and Continuing Care: ~4%
• Dental Services: ~4%

For more comprehensive data and context on these trends, you can explore the KFF Health Care Costs and Affordability Guide.

Yes, the United States spends more money on healthcare per person and as a share of its economy than any other high-income nation.

Key Spending Facts

• Per Capita Spending: In 2024, the U.S. spent an estimated $14,775 to $15,474 per person on healthcare. This is roughly double the average of other wealthy peer countries (which average around $7,400 to $7,800 per person) and thousands higher than the next highest spender, Switzerland.
• Share of the Economy: Healthcare accounts for about 18% of the U.S. Gross Domestic Product (GDP), compared to an average of roughly 11% to 12% in peer OECD nations.
• Drivers of Cost: Studies show that higher spending in the U.S. is primarily driven by higher prices for medical services, pharmaceuticals, administrative costs, and provider salaries rather than higher utilization rates.
• Outcomes: Despite spending the most, the U.S. routinely ranks lower on key health metrics—such as life expectancy and avoidable mortality—compared to other high-income countries. You can explore detailed cross-country tracking through the Peterson-KFF Health System Tracker.

The seven largest spending categories for the U.S. federal government, according to official budget functions from the U.S. Treasury Fiscal Data, are Social Security, Net Interest on the debt, Medicare, Health (non-Medicare services like Medicaid), National Defense, Income Security, and Veterans Benefits and Services.

The 7 Largest Federal Expenses

• Social Security: Around 22% of the budget ($1.58 trillion). This mandatory program provides retirement, survivor, and disability benefits.
• Net Interest: Around 15% of the budget ($970 billion). This covers interest payments on the federal debt held by the public.
• Medicare: Around 14% of the budget ($997 billion). This program provides health insurance for Americans aged 65 and older and people with disabilities.
• Health: Around 14% of the budget ($979 billion). This covers federal healthcare services outside of Medicare, primarily Medicaid and health subsidies.
• National Defense: Around 13% of the budget ($916 billion). This discretionary funding covers the military activities of the Department of Defense.
• Income Security: Around 9% of the budget ($702 billion). This includes cash and aid assistance for low-income or unemployed individuals (such as SNAP/food stamps and unemployment compensation).
• Veterans Benefits and Services: Around 6% of the budget ($377 billion). This finances programs and healthcare managed by the Department of Veterans Affairs.

Healthcare costs and insurance premiums have increased under President Trump, driven by federal budget legislation, expired subsidies, and general market inflation.

Rising Costs and Policy Impacts

• Budget Cuts: According to reports by Families USA, a federal budget bill cut nearly $1 trillion from Medicaid and restricted eligibility, which increased the uninsured rate and shifted uncompensated care costs.
• Expired Subsidies: Enhanced Affordable Care Act (ACA) premium tax credits expired without a congressional extension, causing net marketplace premiums to spike for many consumers.
• Family Expenses: The Center for American Progress states that administration policies, higher deductibles, and tariff impacts have added financial pressure to household healthcare budgets.

Administration Actions on Transparency

• Price Transparency: According to PBS News, the Trump administration has warned hundreds of hospitals to disclose pricing data or face fines, aiming to use market competition to lower costs over time.
• Affordability Proposals: The White House introduced the "Great Healthcare Plan" framework to target pharmacy benefit managers, expand over-the-counter drug options, and promote lower prescription pricing.

The United States spends the most money on health care in the world, both per person and as a share of its economy.

Spending Breakdown

• Per Person: The U.S. spends about $14,885 per person each year on health care. This is roughly double the average of other wealthy nations.
• Share of Economy: Health care takes up about 17.2% of the total U.S. Gross Domestic Product (GDP).
• Next Highest Spenders: Switzerland follows the U.S. with about $9,963 per person, followed by countries like Germany and Norway.

Why U.S. Spending is Higher

• Prices: Higher costs for medical services, hospital stays, and prescription drugs drive the gap rather than people going to the doctor more often.
• Administration: The complex system of private insurance companies creates high administrative costs.