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National Report Projects Health Care Spending to Average 5.6 Percent During the Next Decade

February 21, 2017

The Centers for Medicare & Medicaid Services (CMS) released its national health expenditure projections for 2016–2025.

The findings reflect that health spending, influenced by aging “baby boomers,” is expected to begin to increase at a faster rate, with the slowest growth during 2016 (4.8 percent) and 2017 (5.4 percent), and then higher increases during the remaining years. This follows a period of historically slow national health care spending growth.

Key highlights from the report include:

  • National spending is anticipated to have grown 4.8 percent during 2016, compared to 5.8 percent during 2015
  • Medical prices are projected to increase more rapidly, from a low during 2015 of 0.8 percent, to almost 3 percent by 2025
  • Influenced by the availability of higher-priced specialty medications, national drug spending growth is expected to increase from a projected 5 percent during 2016, to 6.4 percent annual from 2017 to 2025
  • Total Americans with health insurance coverage is projected to increase from 90.9 percent during 2015, to 91.5 percent during 2025

When looking at the findings by payer:

  • Medicaid spending growth was 3.7 percent during 2016, compared to 9.7 percent during 2015
  • Medicare spending growth is expected to have reached 5 percent during 2016, from 4.5 percent during 2015
  • Private health insurance growth is projected to be 5.9 percent during 2016, down from 7.2 percent during 2015
  • Out-of-pocket spending by individuals is projected at 3.6 percent during 2016, up from 2.6 percent during 2015
  • Government programs (federal, state, and local) are expected to support about 47 percent of national health care spending by 2025. This is an increase from 26 percent during 2015.

The report provides a perspective of the changing nature of health expenditures, the pressure by governments and employers on health care providers to reduce per capita costs, and the growing reliance of certain health care providers on these programs.

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