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The Latest National Health Spending Projections, Part 1

By June 20, 2024June 21st, 2024Commentary

It is useful to understand past components of health spending from multiple perspectives, but it is even more important to examine where that spending is heading in the future.  Health spending is a huge percent of the US economy–over 18% of GDP.  Every year the Office of the Actuary at the Centers for Medicare and Medicaid Services, which oversees the Medicare program and federal aspects of Medicaid, releases its analysis of spending in the past year and projects future spending.  (OA Report)

Health spending grew 7.5% in 2023 compared to 2022.  National health expenditures were $4.46 trillion in 2022, $4.8 trillion in 2023 and is projected to be $5.04 trillion in 2024 and $7.7 trillion in 2032.  Personal health care expenditures, which is the health care we all receive, was $3.7 trillion in 2022, $4.04 trillion in 2023, and is projected to be $4.25 trillion in 2024 and $6.53 trillion in 2032.  On a per capita basis was $11,200 in 2022, $12,140 in 2023 and is projected to be $12,700 in 2024 and $18,600 in 2032.  Bet you didn’t know that much was being spent on your health care!!

Of personal health care spending in 2023, private health insurance spent $1.43 trillion, Medicare $1.02 trillion, and Medicaid $852 billion.  For 2032, projections are that private health insurance will spend $2.22 trillion, Medicare $1.94 trillion and Medicaid $1.33 trillion.  On a per employee basis, for 2023 private health insurance spent $6838 per person, Medicare $15,689 and Medicaid $9336.  For 2032 the comparable figures are projected to be $10,576 for private insurance, $24,921 for Medicare and $15,632 for Medicaid.  Private insurance spends less because the covered population is younger and it is managed better.  Looking at those projections for Medicare and Medicaid spending, you can see why the federal budget is so stressed.

93% of the population had some health coverage in 2023, that is projected to drop to 90.7% by 2032, largely because the epidemic Medicaid expansion is being reversed.  In 2023, about 210 million Americans had coverage through private health plans; 65 million through Medicare and 91 million through Medicaid.  In 2032, as the population ages, the same number are projected to be covered by private insurance, 77 million by Medicare and 85 million by Medicaid.  The Medicaid numbers are ludicrous, Medicaid was supposed to cover a few people unable to work, not old enough for Medicare and without another source of health insurance.

As people never tire of pointing out, our health spending is far higher per capita than that in other advanced economies.  But that comparison ignores health lifestyle issues, like obesity and drug and alcohol abuse, that are far more prevalent in the US.  And most of that difference is due to higher prices in the US, not excessive utilization.


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