Median Per Person Healthcare Spending Exceeds $6K

Healthcare spending is still on the rise, with median costs per person increasing to over $6,000 in 2021, according to a new analysis from the Health Care Cost Institute (HCCI).

Median per person healthcare spending increased by 24 percent from 2017 through 2021, HCCI’s latest Healthy Marketplace Index shows. But healthcare spending varied significantly depending on where people lived. For example, patients in metropolitan areas with the highest utilization rates paid nearly three times more for healthcare services that year compared to their neighbors in metropolitan areas with the lowest utilization rates.

Rising medical prices impacted healthcare spending, with overall spending growth reflecting a 9 percent increase in prices, on average, and 14 percent increase in service use, on average.

The American Medical Association (AMA) reports patients spent $433.2 billion, or 10.2 percent of total healthcare spending, in 2021, the same year of the HCCI analysis.

"High and growing health spending is forcing families, employers, and governments across the country to make difficult tradeoffs," Katie Martin, HCCI’s president and CEO, said in a statement. "The Healthy Marketplace Index shows that health care costs depend a great deal on where you live, the result of market dynamics like prices, practice patterns, and competition. Therefore, we need a multi-dimensional approach to making [healthcare] more affordable."

Market consolidation continues to impact medical prices and overall healthcare spending. The Healthy Marketplace Index shows that most hospital markets lacked competition in 2021 and two-thirds of the 183 metropolitan areas studied became less competitive over time.

A Health Affairs study from May 2022 found that vertical consolidation — for example, health systems buying physician practices — resulted in a 12 percent increase in primary care physician prices and a 6 percent increase in specialist prices. Research has also shown similar price increases when markets experience horizontal consolidation, which is when hospitals merge or acquire other hospitals.

Hospital markets tended to be less concentrated in larger metropolitan areas, such as San Franciso, New York City, and Philadelphia. Meanwhile, according to HCCI’s analysis, the most concentrated areas were metropolitan areas with populations of less than 350,000 in 2021. The most concentrated areas included Johnson City, Tennessee, Kingsport, Tennessee, and Wilmington, North Carolina.

HCCI notes that a potential factor in market consolidation is the degree to which patients from one metropolitan area seek care in a neighboring region.

Healthcare spending is only expected to rise, with the latest healthcare spending projections from federal actuaries estimating healthcare to account for nearly 20 percent of gross domestic product (GDP) by 2031.

HCCI’s Healthy Marketplace Index provides interactive reports in which readers can compare prices and hospital market concentration across metropolitan areas.