America’s health care spending is so out of control that the country’s economy is becoming dependent on it.
According to a report released today by the U.S. Department of Commerce, economic growth swelled in the third quarter of 2025. While that’s theoretically good news, an ever-larger share of that consumer spending is devoted to health care costs: Over the previous three months, expenditures on health care increased more than on any other goods or services. Health care spending, in fact, contributed more to the country’s gross domestic product growth than any other personal expenses.
The second largest contributor to economic growth was an increase in consumer spending on nondurable goods — which, according to the U.S. Bureau of Economic Analysis, “was mainly in prescription drugs.”
And these spending increases came before insurance premium bills are set to skyrocket next year for both individual and employer-sponsored health plans.
The rising cost of medical care, which includes medical procedures, nursing-home services, insurance, drugs, and medical equipment, has long outpaced general inflation. Currently, health care spending represents about 18 percent of the U.S. economy, meaning that roughly one out of every five dollars spent goes toward health care costs — more than what Americans spend on groceries or housing. In 1960, it was only 5 percent.
Credit: Peterson-KFF Health System Tracker
Perhaps unsurprisingly, people in the U.S. are far outspending individuals in other high-income nations on health care-related costs. On average, other wealthy nations spend about half as much per person on health care as the U.S. — even though American taxpayers subsidize the development costs of many of the drugs other countries pay far less for.
No wonder total U.S. medical debt has surpassed $200 billion, with one in 12 U.S. adults in debt over health care bills.
Medical spending is also fueling federal debt. According to the U.S. Government Accountability Office, the costs of federal health programs like Medicare, Medicaid, and the Children’s Health Insurance Program accounted for roughly 31 percent of all federal program spending in 2024.
The solution is health care reform — reining in drug and procedure costs, cracking down on health care consolidation, cutting out price-gouging corporate middlemen, and ending systematic Medicare abuses, such as those common in for-profit Medicare Advantage plans. And, of course, moving forward with wildly popular Medicare for All.
But here’s the rub: As ever more of the country’s economy becomes tied to medical spending, it becomes increasingly difficult to challenge the corporations and reform the system that are consuming all of that money. As the Brookings Institution warned way back in 2008, “The high and rising cost of expanding coverage is a major reason why previous attempts to achieve universal coverage have not succeeded, and why reform will keep getting harder if we use the same approaches as in the past.”
Now, nearly 20 years later, has our health care system finally become too big to heal?
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