U.S. health spending to approach 20% of GDP by 2026

By Kate Madden Yee, AuntMinnie.com staff writer

February 14, 2018 -- U.S. healthcare spending will see a relatively modest increase over the next decade -- but even so, the growth means that the country will spend nearly 20% of its gross domestic product (GDP) on healthcare by 2026, according to an analysis from the U.S. Centers for Medicare and Medicaid Services (CMS) published online February 14 in Health Affairs.

A team led by economist Gigi Cuckler of CMS' Office of the Actuary projected that total health spending will reach $5.7 trillion by 2026. The estimated annual growth rate of 5.5% will outpace average projected GDP growth by one percentage point between 2017 and 2026, and as a result, healthcare's share of the economy will be 19.7% by 2026, up from 17.9% in 2016.

Among major payers for healthcare over the 2017 to 2026 period, Medicare will experience the most rapid annual growth at 7.4%, while Medicaid will average 5.8% and private health insurance will average 4.7%, the report said. Cuckler and colleagues also predicted that by 2026, federal, state, and local governments will pay for 47% of healthcare spending, up from 45% in 2016 -- which the group attributed to the continued transition of baby boomers out of private insurance and into Medicare.

CMS projected that the proportion of uninsured Americans will increase between 2018 and 2020, from 30 million to 32.7 million, caused in part by the recently passed Tax Cuts and Jobs Act, which repealed the Affordable Care Act (ACA) mandate requiring that individuals purchase health insurance.

“Today’s report ... shows that healthcare spending is expected to continue growing more quickly than the rest of the economy,” said center administrator Seema Verma in a statement. “This is yet another call to action for CMS to increase market competition and consumer choice within our programs to help control costs and ensure that our programs are available for future generations.”

The report will appear in the March 2018 issue of Health Affairs.


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