Unbiased Analysis of Today's Healthcare Issues

US Healthcare Spending Projections

Written By: Jason Shafrin - Jul• 18•16

In 2016 we will hit a milestone: national health spending per capita is projected to exceed $10,000 for the first time.  This estimate is from an article by Keehan et al. (2016).  In this paper, CMS’ Office of the Actuary (OACT) estimates costs not only this year but over the coming 10 years.  According to their projects, health care costs will continue to rise.

Health spending growth in the United States for 2015–25 is projected to average 5.8 percent—1.3 percentage points faster than growth in the gross domestic product—and to represent 20.1 percent of the total economy by 2025…In addition, the share of total health expenditures paid for by federal, state, and local governments is projected to increase to 47 percent by 2025.

Although the U.S. is seen as a market-based system, the government will pay for about half of all health care spending by 2025. In the near term, OACT estimates the following growth rates between 2017-2019:

  • Overall: 5.7%
  • Medicare: 6.7%
  • Medicaid: 5.6%
  • Private health insurance: 5.6%

Medicare will grow the fastest due to the baby boom.  OACT blames “the continued use of high-cost specialty drugs and faster growth in drug prices” for the relatively fast increase in private health insurance cost.

 

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2 Comments

  1. We need to reduce the amount of healthcare costs. The other countries do it. Why not the USA?

  2. Adam says:

    Thanks for the information. I agree that value based medicine is here for good, and will soon be pinching every penny to reduce these increased healthcare costs.

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