In 2023, U.S. health expenditures surged by 7.5%, reaching $4.9 trillion, or an average of $14,570 per person, according to the Centers for Medicare & Medicaid Services. Private health insurance spending saw the sharpest increase (11.5%), while Medicare and Medicaid each grew by approximately 8%. Hospital expenditures jumped 10.4%, and prescription drug spending rose 11.4%. Federal funding accounted for the largest share (32%), followed by households (27%) and private businesses (18%).

“Understanding these trends is critical as policymakers and stakeholders navigate rising costs and resource allocation,” the study said.

Researchers examined data across 148 health conditions, 38 age-sex groups, four payer types and seven care categories. They assessed service utilization by measuring service volume per prevalent case. Price and intensity were evaluated based on spending per visit, admission or prescription. The study also quantified the contribution of each factor to spending variation. In 2019, this study captured three-fourths of personal health care spending: and found that:

• Service utilization accounted for 65% of cross-county spending variation.
• Price and intensity of services contributed 24%.
• Disease prevalence and population age explained 7% and 4%, respectively.
• Spending variation differed by payer, care type and health condition, with service utilization strongly linked to insurance coverage, income and education.
• Higher Medicare Advantage enrollment was associated with lower utilization.

State-level differences also emerged. Utah’s low per capita spending was driven by a younger population, while New York’s high spending was largely because of elevated hospital and prescription drug costs caused by higher service prices and intensity.

Researchers believe understanding these spending variations trends could help policymakers allocate resources more effectively.

“Our study should not be misinterpreted to suggest that variation in spending and utilization levels is bad,” they concluded. “To the contrary, we show that disease prevalence and age of a county contribute to differences in spending.”