By NextBestFitPart 1
Costs
138 cost items that make up U.S. health spending, broken down by service, payer, occupation (head count × average wage), industry payroll, hospital cost structure, drug R&D and manufacturing, insurance and intermediaries, administration, waste, liability, fraud, training, long-term care, margins, and capital. Many items overlap (a nurse's wage is inside hospital spending), so only categories marked "adds up" can be summed.
National spending by service
| Item | How it is built | Amount |
|---|---|---|
| Hospital care | Out of pocket $40.6B + Private health insurance $558.9B + Medicare $439.8B + Medicaid $318.9B + Other insurance programs (CHIP, DoD, VA) $103.3B + Other third-party payers & programs $173.2B | $1.63T |
| Physician & clinical services | Out of pocket $94.3B + Private health insurance $505.1B + Medicare $251.2B + Medicaid $112.5B + Other insurance programs (CHIP, DoD, VA) $48B + Other third-party payers & programs $98.7B | $1.11T |
| Other professional services | Out of pocket $44.8B + Private health insurance $57.3B + Medicare $47.5B + Medicaid $17.1B + Other insurance programs (CHIP, DoD, VA) $0.8B + Other third-party payers & programs $17.3B | $184.9B |
| Dental services | Out of pocket $72.5B + Private health insurance $78.2B + Medicare $12.6B + Medicaid $15.2B + Other insurance programs (CHIP, DoD, VA) $6.7B + Other third-party payers & programs $4B | $189.2B |
| Other health, residential & personal care | Out of pocket $11.2B + Private health insurance $21.1B + Medicare $4.6B + Medicaid $199.8B + Other insurance programs (CHIP, DoD, VA) $3.8B + Other third-party payers & programs $79.9B | $320.5B |
| Home health care | Out of pocket $30.4B + Private health insurance $37.3B + Medicare $55.7B + Medicaid $38.2B + Other insurance programs (CHIP, DoD, VA) $1.7B + Other third-party payers & programs $6.1B | $169.4B |
| Nursing facilities & continuing-care communities | Out of pocket $48.7B + Private health insurance $19.3B + Medicare $47.3B + Medicaid $78.9B + Other insurance programs (CHIP, DoD, VA) $7B + Other third-party payers & programs $18.7B | $219.9B |
| Retail prescription drugs | Out of pocket $55B + Private health insurance $172.1B + Medicare $162.8B + Medicaid $53.9B + Other insurance programs (CHIP, DoD, VA) $16.9B + Other third-party payers & programs $6.3B | $467.0B |
| Durable medical equipment | Out of pocket $35.8B + Private health insurance $18.9B + Medicare $18.5B + Medicaid $11.5B + Other insurance programs (CHIP, DoD, VA) $0.3B + Other third-party payers & programs $1.3B | $86.4B |
| Other non-durable medical products | Out of pocket $123.2B + Medicare $5.5B | $128.7B |
| Government administration | Medicare $15B + Medicaid $40.1B + Other insurance programs (CHIP, DoD, VA) $8.1B + Other third-party payers & programs $2.9B | $66.1B |
| Net cost of health insurance | Private health insurance $176.5B + Medicare $57.6B + Medicaid $45.5B + Other insurance programs (CHIP, DoD, VA) $2B + Other third-party payers & programs $24.4B | $306.0B |
| Government public health activity | Government public health $157.6B | $157.6B |
| Non-commercial research | Investment $70.4B | $70.4B |
| Structures & equipment | Investment $168.2B | $168.2B |
| Total (adds up) | $5.28T | |
Who pays (2024)
Clinician & staff wages
| Item | How it is built | Amount |
|---|---|---|
| Physicians (all specialties) | 754,760 people × $277,260 average annual wage | $209.3B |
| Family medicine physicians | 107,510 people × $255,820 average annual wage | $27.5B |
| General internal medicine physicians | 67,150 people × $267,200 average annual wage | $17.9B |
| Pediatricians | 39,390 people × $212,110 average annual wage | $8.4B |
| Psychiatrists | 27,980 people × $269,940 average annual wage | $7.6B |
| Anesthesiologists | 38,760 people × $360,570 average annual wage | $14.0B |
| Surgeons | 49,380 people × $364,360 average annual wage | $18.0B |
| Registered nurses | 3,379,720 people × $101,420 average annual wage | $342.8B |
| Nurse practitioners | 323,040 people × $137,300 average annual wage | $44.4B |
| Nurse anesthetists | 51,840 people × $248,320 average annual wage | $12.9B |
| Physician assistants | 162,150 people × $141,280 average annual wage | $22.9B |
| Licensed practical nurses | 648,410 people × $67,050 average annual wage | $43.5B |
| Nursing assistants | 1,448,910 people × $42,700 average annual wage | $61.9B |
| Home health & personal care aides | 4,305,810 people × $36,120 average annual wage | $155.5B |
| Pharmacists | 321,970 people × $140,920 average annual wage | $45.4B |
| Pharmacy technicians | 471,680 people × $46,620 average annual wage | $22.0B |
| Dentists (general) | 124,390 people × $191,350 average annual wage | $23.8B |
| Dental hygienists | 222,740 people × $98,990 average annual wage | $22.0B |
| Dental assistants | 387,790 people × $50,200 average annual wage | $19.5B |
| Optometrists | 42,790 people × $141,550 average annual wage | $6.1B |
| Opticians | 73,530 people × $51,770 average annual wage | $3.8B |
| Audiologists | 13,660 people × $97,740 average annual wage | $1.3B |
| Medical assistants | 817,870 people × $46,120 average annual wage | $37.7B |
| Physical therapists | 267,330 people × $105,280 average annual wage | $28.1B |
| Physical therapist assistants | 112,430 people × $68,730 average annual wage | $7.7B |
| Occupational therapists | 162,450 people × $101,280 average annual wage | $16.5B |
| Respiratory therapists | 139,790 people × $87,300 average annual wage | $12.2B |
| Radiologic technologists | 230,490 people × $83,840 average annual wage | $19.3B |
| Clinical lab technologists & technicians | 332,940 people × $67,350 average annual wage | $22.4B |
| Surgical technologists | 117,460 people × $68,710 average annual wage | $8.1B |
| EMTs & paramedics | 281,120 people × $52,750 average annual wage | $14.8B |
| Clinical & counseling psychologists | 75,990 people × $112,750 average annual wage | $8.6B |
| Substance use, behavioral & mental health counselors | 491,930 people × $64,440 average annual wage | $31.7B |
| Healthcare social workers | 187,630 people × $71,790 average annual wage | $13.5B |
| Medical & health services managers | 597,080 people × $140,970 average annual wage | $84.2B |
| Medical secretaries & administrative assistants | 961,610 people × $46,800 average annual wage | $45.0B |
| Medical records specialists (coders) | 194,720 people × $56,790 average annual wage | $11.1B |
| Health information technologists | 38,100 people × $74,970 average annual wage | $2.9B |
| Claims adjusters, examiners & investigators (all industries) | 324,230 people × $80,470 average annual wage | $26.1B |
| Insurance claims & policy processing clerks (all industries) | 214,260 people × $52,920 average annual wage | $11.3B |
Health industries: payroll
| Item | How it is built | Amount |
|---|---|---|
| Offices of physicians | 2,936,460 employees × $106,660 average wage | $313.2B |
| Offices of dentists | 1,054,930 employees × $79,690 average wage | $84.1B |
| Offices of other practitioners (therapy, chiropractic, optometry) | 1,305,160 employees × $71,550 average wage | $93.4B |
| Outpatient care centers | 1,182,730 employees × $87,320 average wage | $103.3B |
| Medical & diagnostic laboratories | 309,310 employees × $78,200 average wage | $24.2B |
| Home health care services | 1,789,480 employees × $52,560 average wage | $94.1B |
| Other ambulatory care (ambulance, blood banks) | 369,130 employees × $64,440 average wage | $23.8B |
| Hospitals | 6,712,760 employees × $89,180 average wage | $598.6B |
| Nursing & residential care facilities | 3,395,180 employees × $50,770 average wage | $172.4B |
| Health & personal care retailers (pharmacies) | 1,076,240 employees × $56,830 average wage | $61.2B |
| Pharmaceutical & medicine manufacturing | 348,780 employees × $91,390 average wage | $31.9B |
| Medical equipment & supplies manufacturing | 330,970 employees × $76,220 average wage | $25.2B |
| Health & medical insurance carriers | 451,820 employees × $93,210 average wage | $42.1B |
Hospital cost structure
| Item | How it is built | Amount |
|---|---|---|
| Hospital labor (wages, benefits, contract staff) | 56% of total hospital expenses (AHA estimate from Strata benchmarks, 2024) | $890.0B |
| Hospital medical supplies | 13% of total hospital expenses (AHA estimate from Strata benchmarks, 2024) | $202.0B |
| Hospital drugs | 9% of total hospital expenses (AHA estimate from Strata benchmarks, 2024) | $144.0B |
| Other hospital costs (purchased services, IT, facilities, insurance, depreciation) | 22% of total hospital expenses (AHA estimate from Strata benchmarks, 2024) | $352.0B |
| Total (adds up) | $1.59T | |
Drugs: R&D, manufacturing & distribution
| Item | How it is built | Amount |
|---|---|---|
| Pharmaceutical industry R&D | CBO estimate for 2019: about a quarter of the industry's net revenue | $83.0B |
| Drug manufacturing payroll (U.S.) | 348,780 employees × $91,390 | $31.9B |
| Insulin: production cost per vial | Estimated $2–6 per vial (human insulin about $2.28–3.42, analogs about $3.69–6.16) | $6 |
| Big Three PBM dispensing markups above acquisition cost (2017–2022, total) | FTC interim staff report | $7.3B |
| Pharmacy & drugstore payroll | 1,076,240 employees × $56,830 | $61.2B |
| Medical device & supply manufacturing payroll | 330,970 employees × $76,220 | $25.2B |
Insurance & intermediaries
| Item | How it is built | Amount |
|---|---|---|
| Private insurer overhead & profit (net cost of insurance) | Premiums minus benefits, private health insurance | $176.5B |
| Medicare Advantage & Part D plan overhead | Net cost of insurance, Medicare column | $57.6B |
| Medicaid managed-care plan overhead | Net cost of insurance, Medicaid column | $45.5B |
| Health insurer net earnings (average 2023–2024) | ($25B + $9B) ÷ 2 | $42.0B |
| Broker & agent commissions and marketing (estimate) | About 2% of private premiums | $32.0B |
| State premium taxes on health insurers (estimate) | 1–3% of fully insured premiums | $18.0B |
| Health insurer payroll | 451,820 employees × $93,210 | $42.1B |
| Surprise-billing arbitration (IDR) costs, per year | At least $5B through 2024, about $2–2.5B a year | $2.3B |
Administration
| Item | How it is built | Amount |
|---|---|---|
| Total administrative spending (payers + providers) | About 25% of spending (2019 base); $265B removable with existing interventions | $950.0B |
| Hospitals' cost of collecting payment from insurers | AHA 2026 estimate | $43.0B |
Waste
| Item | How it is built | Amount |
|---|---|---|
| Waste: administrative complexity | Midpoint of published estimate | $266.0B |
| Waste: pricing failure | $231–241B | $236.0B |
| Waste: failure of care delivery | $102–166B | $134.0B |
| Waste: overtreatment & low-value care | $76–101B | $88.5B |
| Waste: fraud & abuse | $59–84B | $71.5B |
| Waste: failure of care coordination | $27–78B | $52.5B |
Liability
| Item | How it is built | Amount |
|---|---|---|
| Medical liability system (2008 dollars) | Payments, legal costs, lost time, and defensive medicine; 2.4% of spending | $55.6B |
| Defensive medicine (2008 dollars) | Part of the liability total | $45.6B |
Fraud & improper payments
| Item | How it is built | Amount |
|---|---|---|
| Fraud at 3% of 2024 spending | $5,278.6B × 3% | $158.4B |
| Fraud at 10% of 2024 spending | $5,278.6B × 10% | $527.9B |
| Medicare FFS improper payments (7.7% rate) | 7.7% × Medicare hospital and physician spending (illustrative; CMS reports about $31B for FFS) | $53.2B |
Training the workforce
| Item | How it is built | Amount |
|---|---|---|
| Median medical school debt (per graduate) | AAMC Class of 2024; 67% of graduates have debt | $200,000 |
| Average resident salary | Medscape 2024 | $70,000 |
| Annual cost per residency position (estimate) | Salary, benefits, teaching time, and overhead | $150,000 |
Long-term & end-of-life care
| Item | How it is built | Amount |
|---|---|---|
| Medicare hospice spending (2023) | 1.7M beneficiaries, about 6,500 providers; $28.3B in 2024 | $25.7B |
| Home health & personal care aide wages | 4,305,810 aides × $36,120 | $155.5B |
| Nursing & residential care payroll | 3,395,180 employees × $50,770 | $172.4B |
Margins & executive pay
| Item | How it is built | Amount |
|---|---|---|
| Hospital operating margin (median 4.9%, 2024), applied to hospital spending | $1,634.7B × 4.9% (illustrative; margins vary widely and many hospitals lose money) | $80.1B |
| Average nonprofit health system CEO pay | Rice University study | $1,300,000 |
| Specialist vs. primary-care pay gap (anesthesiology vs. family medicine, mean wage) | $360,570 − $255,820 (BLS means; specialty surveys show larger gaps) | $104,750 |
Capital, research & public health
| Item | How it is built | Amount |
|---|---|---|
| Structures & equipment | CMS NHE 2024 | $168.2B |
| Non-commercial research (NIH etc.) | CMS NHE 2024 | $70.4B |
| Government public health | CMS NHE 2024 | $157.6B |