U.S. spent $1 trillion on hospitals in 2018, report finds

The U.S. spent more than $1 trillion on hospitals in 2018, the largest percentage of all health spending, according to a new government analysis of health spending released Thursday.

The study from the nonpartisan actuaries at the Centers for Medicare and Medicaid Services (CMS) found $1.2 trillion, or 33 percent of health care spending in 2018, was on hospitals. Total health spending reached $3.6 trillion.

The new report comes as Congress, the Trump administration and 2020 Democratic presidential candidates are debating ways to lower how much money Americans have to pay for care. 

In the Democratic fight over “Medicare for All” and in the push to lower health care costs in general, hospitals usually fly under the radar, as politicians tend to focus on drug companies and insurers. But the report shows hospitals make up a much larger share of health care spending than drug companies.

Retail prescription drug prices fell slightly last year for the first time in 40 years, but spending on retail drugs grew 2.5 percent, to $335 billion. That amounted to 9 percent of total health spending, the study found. 

The Trump administration has targeted hospitals recently with new rules intended to increase transparency and drive down costs by boosting competition. The administration wants hospitals to disclose the discounted prices they give insurers for a wide range of services.

Hospitals groups filed a lawsuit against the administration on Wednesday, challenging the legality of the rules. 

CMS Administrator Seema Verma said the growth in hospital pricing is clear evidence the administration’s transparency rules are needed. 

“With hospital prices increasing 2.4% in 2018– and with price increases driving the growth we’re seeing in hospital spending – why wouldn’t we want to make hospital prices transparent?” Verma tweeted Thursday. 

According to the study, health spending overall climbed 4.6 percent in 2018 to $3.6 trillion, accounting for nearly 18 percent of the U.S. economy. Health care expenditures amounted to $11,172 per person.