The Cost to Care for Americans is Steep and Rising

May 19, 2025

The financial viability of hospitals across the U.S. is in jeopardy due to numerous challenges that affect Americans’ ability to access quality health care, according to a recent report from the American Hospital Association (AHA).

The report outlines the significant financial burden of the heightened expenses that hospitals have faced in recent years in caring for patients, as well as the increasing strain on the field.

“This report should serve as an alarm bell that a perfect storm of rising costs, inadequate reimbursement, and certain corporate insurer practices are jeopardizing the ability of hospitals to deliver high-quality, timely care to their communities,” said AHA President and CEO Rick Pollack. “With so much at stake, policymakers must recommit to making preserving access to hospital care a national priority.”

Here are five key takeaways.

• Top-dollar talent:  Labor costs dominate expenses. Hospitals employ a highly educated, highly paid workforce, anchoring local economies with middle- and high-skill jobs that cannot be outsourced or automated.
• Reimbursement gap:  Despite escalating expenses, Medicare reimbursement continues to lag behind inflation, covering just 83 cents for every dollar spent by hospitals in 2023, resulting in more than $100 billion in underpayments, according to AHA’s analysis. 
• In the red:  Hospital expenses are growing faster than inflation. Continued expense growth threatens hospitals’ solvency and their ability to sustain comprehensive services in the communities they serve.
• Sicker patients:  People with chronic diseases use hospital services more. Heart failure, type 2 diabetes, and acute renal failure are some of the more costly and increasing ailments among Americans.
• Adding to the problem:  Tariffs are disrupting supply chains that hospitals rely on for medicines, devices, and other supplies to provide safe, effective care.

Read the report and learn more about HAP’s advocacy to support hospitals’ financial stability online.