Health Care Spending Trends: Medicare and Private Health Insurance

October 2012 ~ Health Policy Brief No. 4  

Slowing the growth of health care spending continues to be a major domestic policy challenge. In 2010, total U.S. health expenditures reached $2.6 trillion – 18 percent of gross domestic product (GDP). Although health care spending has slowed in recent years, it is projected to grow faster than GDP over the next decade.Medicare, the nation’s largest health insurance program, accounts for one in five health care dollars, and in 2010 accounted for 15.1 percent of the federal budget – a figure that is expected to reach 17.4 percent by 2020.

While both Medicare and private health insurance spending per capita have increased in recent years, the former has generally grown more slowly than the latter. This fact sheet discusses Medicare expenditures in the context of the broader health care system and addresses some of the reasons why Medicare has generally grown less than private health insurance in recent years.