What can health spending tell health insurance agents about growth potential?

The healthcare landscape in the United States has seen notable shifts over the past few years, particularly in how expenditures have evolved across various categories. Between 2020 and 2023, certain areas of healthcare spending exhibited significant growth, while others experienced declines or slower growth. The interactive graph below shows all sectors, but we'll explore the most notable trends and their implications for health insurance agents.

Hospital Care: A Steady Climb

Spending on hospital care increased steadily from $1,267.6 billion in 2020 to $1,519.7 billion in 2023. This represents a cumulative growth of approximately 20% over the four years, with the highest year-over-year increase occurring in 2023 (+10.4%). This surge reflects both rising operational costs and an increased demand for inpatient services as the healthcare system recovers from the COVID-19 pandemic. For insurance agents, this steady increase signals an opportunity to offer hospital indemnity plans or supplemental insurance products to help individuals manage out-of-pocket expenses tied to inpatient care. 

Prescription Drugs: Double-Digit Growth

Expenditures on prescription drugs saw notable growth, rising from $351.0 billion in 2020 to $449.7 billion in 2023. The year-over-year increase was especially sharp in 2023 (+11.4%), likely driven by advancements in pharmaceutical innovations, the introduction of new therapies, and expanded access to treatments. This rising trend presents an opportunity for agents to promote supplemental drug coverage plans that can ease the financial burden for patients. 

Home Health Care: Renewed Focus on In-Home Services

Home healthcare spending grew from $124.5 billion in 2020 to $147.8 billion in 2023. The highest annual increase occurred in 2023 (+10.8%), reflecting a shift toward in-home care as patients and providers sought more flexible, cost-effective alternatives to traditional care settings. This trend highlights the growing importance of home-based healthcare solutions and could signal a demand for long-term care insurance or policies that include comprehensive home healthcare benefits. 

Retail Sales of Medical Products: Robust Expansion

Retail sales of medical products, including prescription drugs and durable medical equipment, rose from $499.6 billion in 2020 to $646.7 billion in 2023. This category exhibited consistent year-over-year growth, with an impressive 10% increase in 2023 alone. The surge reflects heightened consumer demand for medical supplies and the growing prevalence of self-managed care. Health insurance agents might consider offering plans with over-the-counter benefits or health savings accounts to help meet this demand.

Conclusion

The trends in national health expenditures from 2020 to 2023 illustrate a dynamic and evolving healthcare system -- and consumer needs. Health insurance agents who are mindful of these trends will have a leg up on the competition, as they can add additional products before their clients need them.

Data is sourced from CMS, via HealthAffairs.