The U.S. will see a modest increase in healthcare spending through 2025, but the projected 5.8% annual rate of growth is much lower than the rapid pace seen prior to 2008, according to a new analysis from the Centers for Medicare and Medicaid Services (CMS) published online July 13 in Health Affairs.
Healthcare spending in 2015 grew at a rate of 5.5% to $3.2 trillion, CMS' Office of the Actuary found. In the report, CMS projects an average rate of national health spending growth of 5.8% between 2015 and 2025, exceeding the expected average growth in gross domestic product (GDP) by 1.3 percentage points per year. As a result, the agency estimates that the health share of the economy will be 20.1% at the end of this period, up from 17.5% in 2014.
But this projected national health spending growth will remain lower than the average over the previous two decades before 2008 by nearly 8%, CMS said.
"The Affordable Care Act continues to help keep overall health spending growth at a modest level and at a lower growth rate than the previous two decades," said acting administrator Andy Slavitt in a statement released by CMS. "This progress is occurring while also helping more Americans get coverage, often for the first time."
There will be a few growth spurts, however, both on the national level and in the Medicare program. Between 2017 and 2019, national health spending growth is projected to average 5.7% per year, increasing to an average of 6% between 2020 and 2025. Medicare spending growth will average 6.7% annually between 2017 and 2019 and 7.6% between 2020 and 2025, as baby boomers continue to qualify for the program and existing beneficiaries begin to use services more often, the analysis found.
The report also states that only 8% of the U.S. population will be uninsured in 2025, down from 11% in 2014.
By 2025, federal, state, and local governments will pay for 47% of healthcare spending, almost 3 percentage points higher than in 2014. CMS attributes this to the impact of the Affordable Care Act's coverage expansions, the continued transition of baby boomers into Medicare, and the gap between Medicare financing and program outlays.
Finally, CMS estimates that medical prices will gradually rise between 2015 and 2025, averaging 2.4% annually between 2017 and 2019 and 2.8% between 2020 and 2025.
The analysis will also appear in the August 2016 issue of Health Affairs.
