National health expenditure growth is expected to average 5.6% annually over 2016-2025, according to a report compiled by the Centers for Medicare & Medicaid Services’ (CMS) Office of the Actuary (OACT). These projections are constructed using a current-law framework and do not assume potential legislative changes over the projection period.
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National health spending growth is projected to outpace projected growth in Gross Domestic Product (GDP) by 1.2 percentage points. As a result, the report also projects the health share of GDP to rise from 17.8% in 2015 to 19.9% by 2025. Growth in national health expenditures over this period is largely influenced by projected faster growth in medical prices compared to recent historically low growth. This faster expected growth in prices is projected to be partially offset by slowing growth in the use and intensity of medical goods and services.
According to the report, for 2016, total health spending is projected to have reached nearly $3.4 trillion, a 4.8% increase from 2015. The report also found that by 2025, federal, state, and local governments are projected to finance 47% of national health spending, a slight increase from 46% in 2015.
“After an anticipated slowdown in health spending growth for 2016, we expect health spending growth to gradually increase as a result of faster projected growth in medical prices that is only partially offset by slower projected growth in the use and intensity of medical goods and services,” says Sean Keehan, the study’s first author, quoted in a press release. “Irrespective of any changes in law, it is expected that because of continued cost pressures associated with paying for health care, employers, insurers, and other payers will continue to pursue strategies that seek to effectively manage the use and cost of health care goods and services.”
Additional report findings are available here.