Rising Healthcare Costs Offset by Wage Growth, But Disparities Persist Across States

A recent study by Steno Health has revealed significant findings regarding healthcare spending in the United States over the past five years. While healthcare costs have steadily risen, many Americans are spending a smaller percentage of their salaries on these expenses compared to previous years.

The analysis highlights that healthcare costs increased by $1,589, or 20.9%, reaching an average of $9,195 per person in 2023. Despite this growth in expenses, the proportion of income spent on healthcare decreased from 14% in 2019 to 13% in 2023, largely due to a notable increase in wages.

The average annual salary rose from $55,567 to $69,418 during this period, marking a 24.9% increase. This wage growth has resulted in a reduced financial burden on households, despite rising healthcare prices. “The data shows a surprising bright spot in healthcare affordability,” said Alex Milani, medical director at Steno Health. “Though medical costs keep climbing, they’re taking a smaller bite out of the average paycheck.”

However, the study also reveals significant disparities by state. Kentucky and Louisiana are the only states where residents now spend a higher percentage of their income on healthcare than they did five years ago. In Kentucky, the percentage increased from 16% to 17%, while in Louisiana, it increased from 15% to 16%.

States like South Dakota reported the largest improvement in healthcare affordability, with the percentage of income spent on healthcare dropping from 19% to 16%. Other states, including Idaho, Montana, Washington, and New Hampshire, experienced a two-percentage-point decrease in this metric.

The analysis also indicated strong regional disparities, particularly in Southern states, which tend to bear the highest burden of healthcare costs. West Virginia leads the nation with residents allocating 21% of their income to healthcare. Alaska follows closely at 18%. In contrast, Western states like Utah, Washington, and Nevada reported the lowest percentages, each at 11%.

Furthermore, between 2019 and 2023, Louisiana experienced the steepest increase in healthcare costs at 38.2%, followed by Kentucky at 35.4%. On the other hand, New Hampshire recorded the smallest increase at just 5.4%.

With healthcare spending on the rise, the study underscores the complexity of factors influencing affordability across different states. While many Americans may find relief thanks to wage growth, families in Kentucky and Louisiana continue to face mounting challenges in managing their healthcare expenses.

As the conversation about healthcare affordability evolves, it remains crucial for policymakers and stakeholders to recognize these disparities and work towards solutions that benefit all Americans.