July 29, 2015
2 min read

Health care spending expected to increase over decade, but at historically low rate

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Due to expanded health insurance coverage from the ACA, as well as the aging population and economic growth, health care spending is projected to increase at a rate of 5.8% annually between 2014 and 2024, according to recently published data in Health Affairs. 

However, this annual increase remains low in comparison with the 9% annual increase seen in health care spending prior to 2008’s recession.

“Ultimately, these longer-lasting factors result in relatively modest projected health spending growth over the next decade, averaging close to 6 percent per year (compared to the average annual growth of about 9 percent over the three decades prior to the recession), even during a period when the uninsured population is expected to decline by almost 18 million,” the report stated.

The recently published data from the CMS’s Office of the Actuary predicts that the health care share of the U.S. gross domestic product (GDP) will increase from 17.4% to 19.6% by 2024 as a result of health spending outpacing GDP by 1.1% each year.

The peak of health care spending is expected to occur in 2020, with a 6.3% growth rate.

Spending growth for prescription drugs is expected to average 6.3% annually from 2015 to 2024, mainly from costly drug and device developments, such as newly available hepatitis-C treatments, as well as improved medication coverage and clinical guidelines urging early drug treatment therapies.

As the nation’s older population increases, nearly 4 out of every 10 health care dollars will be spent on individuals enrolled in either Medicare or Medicaid. Nearly 19.1 million enrollees are expected by 2024, according to the report. This will mean that almost half (47%) of national health care spending will be funded by local, state and federal governments.  

“Growth in overall health spending remains modest even as more Americans are covered, many for the first time. Per-capita spending and medical inflation are all at historically very modest levels,” Andy Slavitt, CMS Acting Administrator said in a press release. “We cannot be complacent. The task ahead for all of us is to keep people healthier while spending smarter across all categories of care delivery so that we can sustain these results.” – by Casey Hower


CMS. National Health Expenditure Projections 2014-2024. Available at: http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/proj2014.pdf. Accessed July 29, 2015.

Disclosure: Healio.com/Internal Medicine could not confirm relevant financial disclosures at the time of publication.