The financial strain of health care on American households has reached a point where it eclipses other fundamental expenses, a trend that demands scrutiny given its implications for economic stability and consumer behaviour. Recent analyses suggest that health care now consumes a significant portion of household budgets, outstripping costs for essentials like groceries but not yet surpassing housing. This shift, noted in passing by various online discussions such as those on platforms like X from accounts like unusual_whales, reflects a deeper structural issue within the US economy, where medical expenditure growth continues to outpace inflation and wage increases.
Health Care Costs in Context
According to data from the US Bureau of Labor Statistics and the Centers for Medicare & Medicaid Services (CMS), health care spending by households accounted for approximately 8.1% of total consumer expenditure in 2023, and though it is rising, it does not yet constitute 20%. For context, housing remains the largest share of average household spending, at around 33.4% in 2023, while food at home (groceries) comprised approximately 7.7%. CMS projections show that national health expenditure (NHE) will grow at an average annual rate of 5.6% from 2023 to 2032, outpacing projected GDP growth. CMS further projects the health spending share of GDP will rise to 19.7% by 2032, rather than 20.3% by 2033, correcting earlier figures.
To put historical context into perspective, household health care spending in 2013 was about 7.1% of total expenditure, with housing at around 33% and groceries at about 7.6%. The trend is upward for medical spending, driven by rising costs of medical services, prescription drugs, and insurance premiums. In 2023 alone, physician and clinical services expenditure in national accounts grew by 7.0% to $895.4 billion, while retail prescription drug spending rose by 8.4% to $422.6 billion, according to CMS.
Breaking Down the Numbers
The table below illustrates the approximate share of household expenditure across key categories for 2023 and projected figures for 2025, based on the most recent data from the Bureau of Labor Statistics and CMS projections. Note that these figures are averages and vary significantly by income quintile, age, and region.
| Category | Share of Household Expenditure (2023) | Projected Share (2025) |
|---|---|---|
| Health Care | 8.1% | 8.4% |
| Housing | 33.4% | 33.3% |
| Groceries/Food at Home | 7.7% | 7.6% |
These percentages highlight a widening gap between health care and housing costs, with health care rising faster than groceries but not yet rivaling housing as a top expense. Unlike housing or food, health care costs are often non-discretionary, leaving families with little room to adjust when prices rise. The CMS notes that households directly funded about 28% of total health spending in 2023, second only to the federal government at 36%.
Economic Implications
The growing burden of health care costs on household budgets poses risks to discretionary spending, which drives roughly 70% of US GDP. If families are forced to allocate more to medical bills, sectors like retail, hospitality, and consumer goods could face headwinds. Data from the first half of 2025, as reported by outlets like The New York Times, indicates that even wealthier households are beginning to feel inflationary pressures, cutting back on non-essentials. This aligns with broader economic indicators suggesting consumer confidence remains fragile despite cooling recession fears.
Moreover, the burden is not evenly distributed. Lower-income households, already spending a higher proportion of their income on essentials, are disproportionately affected. The Consumer Expenditure Surveys in 2023 show that the bottom income quintile spent 15.3% of their budget on health care, a much higher percentage than the national average. This creates a vicious cycle: reduced disposable income limits access to preventative care, potentially increasing long-term medical costs.
Policy and Market Dynamics
The relentless rise in health care costs cannot be divorced from policy and market structures. The Affordable Care Act expanded coverage, with CMS reporting increased enrolment in private plans in 2023, contributing to a 7.5% rise in total health care spending to $4.8 trillion for the year. Yet, expanded access has not translated to affordability. Prescription drug pricing remains a flashpoint, with rapid growth in expenditure outstripping most other categories.
On the market side, consolidation among providers and insurers has reduced competition, often leading to higher costs for consumers. While legislative efforts to cap drug prices or introduce public options are increasingly discussed, tangible relief for households remains elusive as of mid-2025. Investors and analysts monitoring health care stocks should note that while firms in this sector may see revenue growth, public and political pressure for reform could introduce volatility.
Looking Ahead
The trajectory of household expenditure on health care is unlikely to reverse without systemic intervention. Projections for 2025 and beyond suggest that health care could approach 10% of household budgets within a decade if current growth rates hold. This would not only strain family finances but also challenge policymakers to balance economic growth with social welfare. For now, the numbers tell a story of prioritisation by necessity, where a trip to the doctor increasingly competes with a roof over one’s head or food on the table. A rather grim trade-off, but one that the data insists must be reckoned with.
References
- Centers for Medicare & Medicaid Services. (2024, June 12). Historical NHE Tables. Retrieved from https://www.cms.gov/data-research/statistics-trends-and-reports/national-health-expenditure-data/nationalhealthExpendData
- Centers for Medicare & Medicaid Services. (2024, June 12). National Health Expenditure Projections 2023–2032. Retrieved from https://www.cms.gov/data-research/statistics-trends-and-reports/national-health-expenditure-data/nhe-fact-sheet
- Morningstar. (n.d.). How Healthy Is the U.S. Economy? Here’s What Top Economic Indicators Say. Retrieved from https://morningstar.com/economy/how-healthy-is-us-economy-heres-what-top-economic-indicators-say
- OpenPR. (2024, May 22). 2025-2034 Household Appliances Market Roadmap & Insights. Retrieved from https://openpr.com/news/4110927/2025-2034-household-appliances-market-roadmap-insights
- Peterson-KFF Health System Tracker. (2024, May 10). Health spending in the U.S. and select other countries. Retrieved from https://www.healthsystemtracker.org/chart-collection/health-spending-u-s-compare-countries/
- The New York Times. (2025, July 3). How Health Care Remade the U.S. Economy. Retrieved from https://nytimes.com/interactive/2025/07/03/business/economy/healthcare-jobs.html
- The White House. (2025, July). Data Shows U.S. Economy Is Back on Track Under President Trump. Retrieved from https://whitehouse.gov/articles/2025/07/data-shows-u-s-economy-is-back-on-track-under-president-trump
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- U.S. Bank. (2024, November 15). State of consumer spending: Trends & insights for 2025. Retrieved from https://www.usbank.com/investing/financial-perspectives/market-news/consumer-spending.html
- U.S. Bureau of Labor Statistics. (2024, September 10). Consumer Expenditures in 2023. Retrieved from https://www.bls.gov/news.release/cesan.nr0.htm
- U.S. Bureau of Labor Statistics. (2020, December). How have healthcare expenditures changed? Evidence from the Consumer Expenditure Surveys. Retrieved from https://www.bls.gov/opub/btn/volume-9/how-have-healthcare-expenditures-changed-evidence-from-the-consumer-expenditure-surveys.htm
