Health spending to hit 19.7% of GDP by 2026, report says

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Friday, February 16, 2018

WASHINGTON – National health expenditure growth is expected to average 5.5% annually over 2017-2026, according to a report published this week 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 1% point during 2017-2026. As a result, health share of GDP is expected to rise from 17.9% in 2016 to 19.7% by 2026, the report says.

Drivers of growth: trends in disposable personal income, increases in prices for medical goods and services, and shifts in enrollment from private health insurance to Medicare that result from the continued aging of the baby-boom generation into Medicare eligibility.

For 2017, specifically, growth in national health spending is projected to have been 4.6%. For 2018, growth in national health spending is projected to be 5.3%.

Among the major payers for health care, Medicare is projected to experience the most rapid annual growth rate over 2017-2026 at 7.4%, largely driven by enrollment growth and faster growth in utilization from recent near-historically low rates.

Private health insurance is projected to experience the slowest growth rate at 4.7%, reflecting low enrollment growth and downward pressure on utilization influenced by, among other things, the increasing prevalence of high-deductible health plans.

Medicaid is projected to experience a growth rate of 5.8% over 2017-2026, slower than the 8.3% for 2014-2016.

Growth in personal health spending is projected to be 5.5% over 2017-2026.