Health Care Spending to Rise 5.5 Percent Annually, CMS Estimates

Health care spending in the United States is expected to rise 5.5 percent annually from 2018 to 2027, the Centers for Medicare and Medicaid Services (CMS) estimates in a new report.

health-care-spending-to-rise-5.5%-annually“Among the major payers, average annual spending growth in Medicare (7.4 percent) is expected to exceed that in Medicaid (5.5 percent) and private health insurance (4.8 percent) over the projection period, mostly as a result of comparatively higher projected enrollment growth,” the report — published yesterday in the journal “Health Affairs” — says.

The authors, who all work for or with the CMS Office of the Actuary, also state that health care coverage of the population will remain stable at around 90 percent while spending will rise to 19.4 percent of gross domestic product (GDP) — $6 trillion — up from the current 17.9 percent.

While the projected rise in spending is faster than during the decade beginning with the Great Recession in 2008, it is still lower than the 7.3 percent annual growth rate experienced during the  period starting in 1990 and ending with the Great Recession.

Expenditures on prescription drugs are expected to grow on a 6.1 percent annual rate during the decade starting in 2018.

The outlook for national health spending and enrollment over the next decade is expected to be driven primarily by:

  • Key economic factors, such as growth in income and employment, and demographic factors, such as the baby-boom generation continuing to age from private insurance into Medicare; and
  • Increases in prices for medical goods and services (projected to grow 2.5 percent over 2018-2027 compared to 1.1 percent during the period of 2014-2017).

Similar to the findings in last year’s report, the report found that by 2027, federal, state and local governments are projected to finance 47 percent of national health spending, an increase of 2 percentage points from 45 percent in 2017.

NOTE: The details in this blog are provided for informational purposes only. All answers are general in nature and do not constitute legal advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The author specifically disclaims any and all liability arising directly or indirectly from the reliance on or use of this blog.
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