Health expenditures set to grow 

WASHINGTON – National health expenditures will grow 5.4%, on average, over the course of 2022-31 and will account for about 20% of the economy by the end of that period, according to the latest projections* by the Office of the Actuary at CMS. 

National health expenditures are projected to have grown 4.3% in 2022, slower than nominal gross domestic product (GDP) growth of 9.2%, leading to a decrease in the projected health spending share of GDP from 18.3% in 2021 to 17.4% in 2022, according to the office. However, over the course of the full projection period, 2022–31, health spending is expected to grow, on average, 5.4% per year, outpacing projected average growth in nominal GDP of 4.6% per year and resulting in a health spending share of GDP of 19.6% by 2031, it says. 

Recent legislation is anticipated to affect trends in health insurance enrollment and health care spending over the course of the next decade, according to the office. For instance, the expiration of pandemic legislative provisions is expected to result in: reductions to Medicaid enrollment through 2025 (falling to 81.1 million that year after reaching its peak of 90.4 million in 2022), increases in enrollment in private health insurance from enhanced Marketplace subsidies through 2025, and effects on provider payments for Medicare—most notably the expiration of the add-on payment for COVID-19-related admissions. 

For the major payers, Medicare is expected to grow the fastest over the course of 2022–31, averaging 7.5% per year, according to the office. The growth in Medicare enrollment is partly attributable to the last of the baby boomers enrolling in the program through 2029. 

For the major sectors, hospital spending is expected to grow more rapidly (averaging 5.8% for 2022–31) than spending both for physician and clinical services (5.3%) and for prescription drugs (4.6%), according to the office. Average price growth for hospitals (3.2% over the course of 2022–31) is expected to outpace that of physician and clinical services (2.0%) and prescription drugs (2.2%), reflecting, in part, an expectation that prices associated with the inputs required to provide hospital care will grow more rapidly, as they have over the longer-run history, it says. 

https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2023.00403