Each year, the U.S. Centers for Medicare & Medicaid Services (CMS) Office of the Actuary works with Health Affairs to release national health care spending projections for the coming decade.
The annual data dump helps health-care stakeholders understand where the sector is heading – and what headwinds could be on the horizon. What’s more, the spending projections are broken up into categories and sub-categories, giving the durable medical equipment (DME) space an opportunity to compare its growth projections with that of other industries.
Looking at 2024, U.S. health-care expenditures are projected to have grown 8.2%. For 2025, health spending is projected to slow somewhat, though still increasing by 7.1%, according to the CMS Office of the Actuary.
For context, national gross domestic product (GDP) growth in 2024 was 5.3%.
“This largely reflects sustained high growth in the use of health-care services and goods after the muted growth that was observed during the COVID-19 pandemic,” a group of health-care economists wrote in Health Affairs. “As a result of this increase in health spending, the health share of the economy is expected to have increased to 18.0% in 2024 (up from 17.6% in 2023).”
The country’s aging population, especially baby boomers aging into Medicare through 2029, is one of the main reasons for a projected spending increase over the long term.
From 2024 to 2033, national health care expenditure growth is expected to outpace GDP, with health care’s share of GDP reaching 20.3% by 2033. On an annual basis, spending is projected to rise by roughly 5.8% during that period.
“Beyond 2024, the early years of the projection period are expected to experience downward pressure on spending growth from the expired FFCRA (Families First Coronavirus Response Act) and from a few key provisions of the IRA (Inflation Reduction Act),” the economists continued. “From an enrollment perspective, the drop in Medicaid enrollment in 2024 is expected to be followed by a smaller decline (1.0 million) in 2025, which is the net effect of states completing their redetermination procedures (and related disenrollments) and incorporating re-enrolled and newly enrolled beneficiaries.”
Spending by category
In 2024, U.S. health care spending on durable medical equipment was an estimated $78 billion. That’s a significant increase compared to 2023 and 2022, when DME spending was an estimated $72.8 billion and $68.6 billion, respectively.
Looking ahead, U.S. health care expenditures related to DME are projected to jump to $84 billion in 2025 – and to $120.8 billion by 2033.
While those seem like big numbers, they’re dwarfed by spending on hospital care and other categories. Projected U.S. health-care expenditures for hospital care for 2024 were $1.66 trillion.
Related to the world of DME and home medical equipment (HME) is home health care. That’s an area where spending is projected to increase strongly as well.
In 2024, U.S. health care spending on home health care was projected to be $160.5 billion. That figure is projected to increase by upwards of 8% annually through 2033, eventually reaching around $317.3 billion.
