Hospital care

Private insurers paid roughly 254% of Medicare for hospital services in 2022 (RAND round 5); we use 220% to blend in lower-paying Marketplace and Medicare Advantage-adjacent contracts. Medicaid pays below Medicare on base rates but closer to it once supplemental and directed payments are counted, so 90%. UHP pays 120% of Medicare because MedPAC finds Medicare fee-for-service margins negative for the average hospital (about -13% in 2023); 120% approximately covers the average efficient hospital's costs once billing overhead falls. Inpatient care is not very price-sensitive, so utilization rises only 4%.

Result

$1.62T

$1.63T → $1.62T

Per resident, per year

$4,738

÷ 341.1M people

Per household

$12,226

÷ 132.2M households

Range

$1.49T–$1.81T

Lean and costly scenarios.

How it's calculated

#	Step	Arithmetic	Value
1	2024 spending on this service (CMS NHE Table 4) Sources: CMS Office of the Actuary (2025)		$1.63T
2	Private health insurance paid $558.9B at 2.20× the reference price → volume Sources: CMS Office of the Actuary (2025)	$558.9B ÷ 2.20×	$254.0B
3	Medicare paid $439.8B at 1.00× the reference price → volume Sources: CMS Office of the Actuary (2025)	$439.8B ÷ 1.00×	$439.8B
4	Medicaid paid $318.9B at 0.90× the reference price → volume Sources: CMS Office of the Actuary (2025)	$318.9B ÷ 0.90×	$354.3B
5	Out-of-pocket spending in 2024 Sources: CMS Office of the Actuary (2025)		$40.6B
6	Covered out-of-pocket converted to reference-price volume	$40.6B ÷ 1.60×	$25.4B
7	Care UHP takes over, valued at 2024 prices		$1.36T
8	Same care valued at the reference price (Medicare fee-for-service rates)		$1.07T
9	Re-priced at UHP rate 1.20×	$1,073.6B × 1.20×	$1.29T
10	Price effect (same care, new prices)	$1,288.3B − $1,358.2B	−$69.9B
11	Utilization multiplier 1.04×	$1,288.3B × 1.04×	$1.34T
12	Utilization effect (more care)	$1,339.8B − $1,288.3B	$51.5B
13	UHP spending on this service		$1.34T
14	Plus Other insurance programs (CHIP, DoD, VA) (continues unchanged)		$103.3B
15	Plus Other third-party payers & programs (continues unchanged)		$173.2B
16	Total national spending on this service under the plan	$1,339.8B + $0.0B + $276.5B	$1.62T
17	Change from 2024	$1,616.3B − $1,634.7B	−$18.4B

Trade-off: Providers of this service receive $69.9B less for the same care; patients receive $51.5B more care.

Sources: CMS Office of the Actuary (2025); RAND Corporation (2024); Medicare Payment Advisory Commission (2025); MACPAC (2017)