Health share of GDP to hit 19.4% by 2027, report says

Friday, February 22, 2019

WASHINGTON – National health expenditure growth is expected to average 5.5% annually from 2018-2027, reaching nearly $6 trillion by 2027, according to a report published by the Office of the Actuary at CMS.

Growth in national health spending is projected to be faster than projected growth in gross domestic product by 0.8% over the same period.

As a result, health share of GDP is projected to increase from 17.9% in 2017 to 19.4% by 2027, the report says.

National health spending over the next decade is expected to be driven by:

  • key economic factors, such as growth in income and employment;
  • demographic factors, such as the baby boom generation continuing to age from private insurance into Medicare; and
  • increases in prices for medical goods and services, which are projected to grow 2.5% over 2018-27 compared to 1.1% over 2014-17.

Similar to last year’s findings, the report found that by 2027, federal, state and local governments are projected to finance 47% of national health spending, an increase of 2% from 45% in 2017.

As a result of comparatively higher projected enrollment growth in Medicare, average annual spending growth in Medicare (7.4%) is expected to exceed that of Medicaid (5.5%) and private health insurance (4.8%).

Underlying the strong average annual Medicare spending growth are: projected sustained strong enrollment growth as the baby boomers continue to age into the program and growth in the use and intensity of covered services that is consistent with the rates observed during Medicare’s long-term history, the report says.