New estimates from the Centers for Medicare and Medicaid Services project that health spending growth will outpace the expected average growth in gross domestic product for almost the entire next decade.
New estimates released today from the Office of the Actuary at CMS project an average rate of national health spending growth of 5.8 percent for 2015–25, exceeding the expected average growth in gross domestic product by 1.3 percentage points per year.
As a result, the health share of the economy is projected to be 20.1 percent at the end of this period, up from 17.5 percent in 2014. The study also projects that the percentage uninsured americans will drop to eight percent in 2025, down from about 11 percent in 2014.
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The authors found that projected national health spending growth, though faster than observed in recent history, is slower than in the two decades before the recent recession, partly because of trends like increasing cost sharing in private health insurance plans and various Medicare payment update provisions.
A change in who ultimately pays for the nation's healthcare is expected 2025. By that time, 47 percent of health spending is projected to be sponsored by federal, state and local governments -- almost three percentage points higher than 2014. In contrast, the projected share of health spending sponsored by businesses and households in 2025 is expected to be 53 percent, approximately three percentage points lower than in 2014.
This expected higher share of spending by governments reflects the full impacts from the Affordable Care Act's coverage expansions, the continued transition of the baby-boom generation into Medicare, and the growing gap between dedicated Medicare financing and program outlays, authors said.
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Each year, CMS's Office of the Actuary releases an analysis of how americans are expected to spend their healthcare dollars in the decade ahead. The predicted 5.8 percent growth rate is identical to the rate predicted for 2014–24 in the Office of the Actuary's 2014 report.
"Following the initial effects of the Affordable Care Act on healthcare spending and insurance coverage, increases in economic growth, faster growth in medical prices, and population aging are expected to be the primary drivers of national health spending and coverage trends over the next decade," said lead author Sean Keehan in a statement.
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Keehan and his coauthors project that, following slower growth of 4.8 percent in 2016, health spending growth will accelerate slightly from 2017-19, averaging 5.7 percent. Medicare spending is also expected to accelerate over this three-year period, averaging 6.7 percent, as baby boomers continue to age into this federal program, and existing beneficiaries are expected to use services more often than in the recent past.
For the Medicaid program, the authors expect that spending growth will average 5.6 percent from 2017-19; private health insurance spending growth is projected to mirror that trend, representing its fastest rate for any subcategory examined in the projection period.
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