Robbin Gaines, Senior Program Officer, Market Analysis and Insight
Each year, the Centers for Medicare & Medicaid Services (CMS) makes national health spending projections for the next decade.
According to the most recent CMS projections, by 2025 national health spending will reach $5.6 trillion, or $16,000 spent on health care for every American.
Health spending is projected to stay its course of growing faster than the economy. Between 2015 and 2025, the annual growth rate for health spending is expected to average 5.8%, 1.3 percentage points higher than the expected growth in gross domestic product (GDP).
Based on these projections, health spending’s share of the economy is expected to increase from 17.5% of GDP in 2014 to 20.1% of GDP in 2025.
Of all payers, Medicare spending is set to grow the most. Between 2015 and 2025, Medicare spending is expected to grow an average of 7.1% annually, compared to 5.9% for Medicaid and 5.4% for private insurance. Out-of-pocket spending is projected to increase an average of 5.1% annually during this same period.
Total health spending per enrollee is projected to grow, mainly due to Medicare spending. Overall per capita spending is expected to increase from $9,523 in 2014 to $16,032 in 2025. Medicare projected spending per enrollee is expected to reach $17,911 in 2025, up from $11,707 in 2014.
Medicare is projected to pay a larger share of hospital, physician and clinical services, and prescriptions, as baby boomers continue to age into the program and existing Medicare beneficiaries use more hospital and physician services. By 2025, one in five Americans (71.6 million) are expected to be covered by Medicare, a 36% increase from 2014.