How does government health care spending differ from private insurance?

The United States will spend nearly $4.3 trillion on health care in 2021, according to the Centers for Medicare and Medicaid Services (CMS). But what does this huge number actually mean given the complex, overlapping system of public and private health insurance? Who “spends” all this money and who receives it? Let’s break it down:

  • Government insurance programs, such as Medicare and Medicaid, account for 42 percent, or $1.8 trillion, of national health care spending.
  • Private insurance programs, including employer-provided health insurance as well as plans purchased through the Affordable Care Act, account for 28 percent, or about $1.2 trillion.
  • Out-of-pocket costs, such as premiums paid by individuals and other out-of-pocket costs, costs by third-party payers, investments in research and equipment, and public health activity account for the remaining 29 percent, or $1.2 trillion, of national spending for healthcare.

The share of government spending on health care is growing