Health care costs are among the highest that people face during their lifetimes. That is particularly true in the United States. According to an OECD study, the nation that spends the most on health care by far is the United States, at $10,982 per capita. The next nation, Switzerland, has a comparable figure of $7,138. Just as these numbers vary from country to country, they also are much different from state to state.
Though expensive, health care costs, to a large extent, are covered by the government. In 2019, the federal government paid for 29.0% of all health-related spending in the United States. Slightly less (28.4%) came from households. State and local governments covered 16.1% of the total cost. In 2018, the latest year for which state and local data is available, state governments spent $885 billion on health care, or $2,696 per person. Due to different budget priorities and needs, local government health care spending varies considerably by state.
To determine the state that spends the least on health care, 24/7 Tempo reviewed the detailed health care expenditures by state governments provided by the U.S. Census Bureau’s 2018 Annual Survey of State and Local Finances. Per-capita health care spending ranges from less than $1,100 to more than $3,600.
States allocate between 17% and 39% of their total budgets to health care costs. The major categories of health spending at the state level include partial Medicaid coverage, state-run hospitals and university medical schools and, finally, other health expenses and programs addressing needs, such as community wellness, substance abuse, health inspection and pollution control.
In every state, the largest portion of overall health care spending goes towards public welfare programs. These include Medicare and Medicaid, two government-funded health insurance programs that offer coverage to the elderly, the disabled and people with low incomes.
State spending on health in 2018 consisted of three components:
- Each state’s public health expenditure, which includes all public health activities, except provision of hospital care.
- Hospital expenditure, including the construction and operation of hospitals by each state government and payments to privately operated hospitals
- Welfare payments made directly to private vendors for medical assistance and hospital and health care.
Per capita spending was calculated using the total of each state’s expenditure in these areas, and 2019 annual estimates come from the Census Bureau’s 2019 American Community Survey (ACS). The shares of the population 65 and older, those living with a disability and those with health insurance also came from the ACS and are for 2019.
The state that spends the least on health care is South Dakota. Here are the details:
- State spending on health in 2018: $1,046 per capita
- Health spending as share of all state spending in 2018: 17.7% (third lowest)
- Total state health budget: $925.7 million
- Population 65 and older: 17.4% (21st highest)
- Population with a disability: 12.6% (21st lowest)
- Adults without health insurance: 10.2% (13th highest)