The Office of the Actuary at the Centers for Medicare and Medicaid Services every year reviews past health spending in the United States and projects forward. In a recently released report, it covers expected spending through 2033. Health spending is estimated to have grown 8.2% in 2024 and is projected to increase by 7.1% in 2025. For the remainder of the projection period annual increases are projected to be just under 6%. All of these percents are substantially higher than projected economic growth. The slowdown in the rise in spending is said to be due to more people not having health insurance and lower utilization growth. (NHE Report)
The increase in 2024, to $5 trillion spent on health care, is said to be due to a rebound in utilization following the epidemic, but I suspect it is driven more by price increases and population growth. Of this amount, $4.46 was spent on personal health care. Not sure what we got for the rest of the spending. By 2033, spending is estimated to be $8.6 trillion, of which $7.3 trillion will be for personal health care. Per person health spending growth over the estimation period is more in the 4.8% range and on an after-inflation basis is around 2.6%.
Medicare and Medicaid spending are forecast to grow significantly more rapidly than private insurance spending, both in aggregate and on a per-person basis. There is substantial additional federal and state health spending for employees of those governments, subsidies to purchase private insurance and other programs. This spending is a major reason for ongoing deficits. Hospital care is the single largest category of received health spending and is projected to have the highest annual growth rate.
Overall, this is not a pretty picture, as both consumers and governments are stressed by the increase in health spending. Without major reforms, this trend will continue indefinitely.
