U.S. health spending is expected to average 5.8 percent a year during the period of 2015 to 2025 according to new data released by the Centers for Medicare & Medicaid Services’ (CMS) Office of the Actuary (OACT). Overall, CMS estimated national health expenditures to have reached $3.2 trillion in 2015.
The figures demonstrate that health spending growth is taper from the 8 percent average experienced in the two decades leading up to 2008. CMS chalked the downward trend up to the Affordable Care Acts impact on health pricing.
The report projects health spending to grow 1.3 percentage points faster than gross domestic product (GDP) per year during 2015 to 2025. This means that health’s share of GDP is expected to rise from 17.5 percent in 2014 to 20.1 percent by 2025.
Other key findings:
- Federal, state and local governments are projected to finance 47 percent of national health spending (up from 45 percent in 2014).
- U.S. health spending will have grown 5.5 percent in 2015, and 2016 is projected to see slower 4.8 percent growth in health spending. CMS attributed that to the enrollment in Medicaid and Marketplace plans slowing and the associated declines in the number of the uninsured decreases.
- In 2015, medical price inflation slowed to 0.8 percent, down from 1.4 percent in 2014. Hospital prices increased by 0.9 percent while price growth in physician services fell by 1.1 percent.
- The share of health expenses that Americans pay out-of-pocket is projected to decline from 10.9 percent in 2014 to 9.9 percent in 2025.
- The insured share of the population is expected to continue to rise from 89 percent in 2014 to 92 percent by 2025.
- Private health insurance expenditures are estimated to have increased by 5.1 percent from 2014 to 2015, reaching $1.0 trillion. Thereafter, average annual growth through 2025 is expected to be similar (5.4 percent).
- Medicaid spending growth is slowing significantly in 2016, to 5.3 percent, which the report attributes to slower enrollment growth and stronger utilization management. Spending growth is expected to average 5.6 percent for 2017-19, lower than in 2014-15.
- In 2015, Medicare expenditures are expected to have been $647.3 billion, a 4.6-percent increase from 2014, driven partly by increased enrollment. However, per-enrollee costs are estimated to have increased by only 2.4 percent, the same as the previous year, continuing the recent trend of low per-enrollee cost increases.
The OACT report is available at http://go.cms.gov/29IZdzA. An article about the study by its authors is available at http://bit.ly/29UEskh.