June 13, 2024

US healthcare spending outpaces GDP, tracks toward $7.7 trillion by 2032

Editor's Note

Growth in healthcare spending is outpacing nominal economic growth, Hospice News reported June 12.

Citing a study from the Office of the Actuary (OACT) at the Centers for Medicare and Medicaid Services (CMS), the outlet reports that healthcare spending’s share of GDP is projected to rise from 17.6% in 2023 to 19.7% in 2032.

Last year, spending grew 7.5%, reaching $4.8 trillion. An average projected growth rate of 5.6% per year—outpacing nominal GDP growth of 4.3%—is expected to push this figure to $7.7 trillion by 2032. Other key points cited in the article include:

  • The insured population reached a high of 93.1% in 2023, with Medicaid and Marketplace enrollment increases. However, Medicaid enrollment is expected to drop from 91.2 million in 2023 to 79.4 million by 2025 due to expiring pandemic policies.
  • Medicare spending grew by 8.4% in 2023, surpassing $1.0 trillion.
  • Private health insurance and out-of-pocket spending growth also accelerated in 2023, from 5.9 percent in 2022 to 11.1 percent and from 6.6 percent in 2022 to 7.9 percent, respectively.
  • The Inflation Reduction Act of 2022 (IRA) is expected to influence Medicare spending and private health insurance enrollment trends.
  • Over 2023–32, Medicare spending is projected to grow the fastest among major payers at 7.4% per year, driven by baby boomer enrollment.
  • Hospital spending grew significantly by 10.1% in 2023, with an average growth of 5.7% per year expected over the next decade.
  • Physician and clinical services spending saw an 8.4% growth in 2023, averaging 5.6% growth annually over 2023–32.
  • Retail prescription drug spending growth is expected to slow to 7.0% in 2023, averaging 6.0% annually over 2023–32.
  • Non-government healthcare sponsors are expected to maintain a similar proportion of total health spending by 2032 as in 2022, while the total government's spending share will fluctuate, decreasing to 46% in 2024 before rising to 49% by 2032.

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