Understanding Healthcare Costs and What Executives Can Do About It

The United States spends more on healthcare per person than other wealthy countries, and the results do not match the spend. In 2022, health spending rose 4.1 percent to $4.5 trillion, about $13,493 per person. That pace looks like the years before the pandemic. The problem was not created by one crisis.

The comparison

Other affluent countries spend less than half as much per person. As a share of the U.S. economy, healthcare rose from about 5 percent in 1962 to about 17 percent in 2022. Some projections put it near 21 percent by 2032.

Price and use

Spending moves for two reasons: how much care people use, and what that care costs. Both are in the number.

• The population is older. People 65 and over use more care. Medicare enrollment passed 65 million in 2022 and is still rising.
• Prices are rising faster than other goods. New technology improves care and arrives with a high price.
• The system is complicated. Insurance and payment administration create waste that does not touch the patient.
• Consolidation can reduce local competition and leave prices with fewer checks.

What an executive team can actually do

National cost trends will not be solved in one leadership meeting. The part a leadership team owns is still real.

• Move from paying for volume toward paying for a result, where the model allows it.
• Put prevention in the plan so the expensive intervention is less often the first move.
• Make prices and tradeoffs visible enough that people can choose.
• Use technology to remove administrative work, not to add another system nobody runs.

Cost work sticks when the people who own the work helped name it. That is an assessment and a workshop before it is a new executive. If a finance, operations, or clinical leadership gap is still open after that, a fractional partner can cover it while someone inside is made ready.