CMS expects national health spending to reach $7.2 trillion by 2031, with 2022 expenditures projected to have hit $4.4 trillion — growing at a rate of 4.3 percent — according to a study published June 14 in Health Affairs.
From 2022 through 2031, health spending is anticipated to grow 5.4 percent a year on average.
Eight things to know:
1. Economic growth outpaced national health spending growth in 2022, according to CMS estimates, causing a decrease in the projected health spending share of gross domestic product from 18.3 percent in 2021 to 17.4 percent in 2022.
2. However, from 2022 through 2031, nominal GDP is estimated to grow 4.6 percent a year — 0.8 percentage point lower than average growth in national health expenditures — with health spending accounting for 19.6 percent of GDP by 2031, according to the report.
3. Recent legislation is likely to affect health insurance enrollment and healthcare spending over the next 10 years, according to Sean Keehan, an economist in CMS' Office of the Actuary and first author of the Health Affairs study. "Altogether, and consistent with its past trend, health spending for the next ten years is expected to grow more rapidly, on average, than the overall economy," he said.
4. The insured population hit a projected high of 92.3 percent in 2022, mainly due to enrollment gains in Medicaid and Marketplace plans. The end of the COVID-19 public health emergency will lead to reductions in Medicaid enrollment — from about 90.4 million in 2022 to 81.1 million in 2025 — but the insured share of the population is expected to remain higher than 90 percent during that period. Study authors partially attributed this to projected increases in enrollment in private health insurance from enhanced marketplace subsidies.
5. Medicare spending is expected to grow from a rate of 4.8 percent in 2022 to 8 percent in 2023, with expenditures anticipated to surpass $1 trillion, according to the study.
6. The Inflation Reduction Act, which President Joe Biden signed into law Aug. 16, is expected to lower out-of-pocket spending on prescription drugs from 2024 as Medicare beneficiaries see savings tied to various provisions, including the $2,000 annual out-of-pocket spending cap and lower gross prices resulting from negotiations with manufacturers.
7. At 7.5 percent, Medicare spending is projected to the fastest among major payers from 2022 through 2031. Private health insurance spending is estimated to grow 5.4 percent a year, while Medicaid's average rate of spending growth is projected to be 5 percent.
8. From 2022 through 2031, on average, hospital spending is projected to grow more quickly (5.8 percent) than that of physician and clinical services (5.3 percent) and prescription drugs (4.6 percent), according to the report. Average price growth for hospitals (3.2 percent) is expected to be greater than that of prescription drugs (2.2 percent) and physician and clinical services (2 percent).
Click here to read the study.