Driven by affordable health insurance and an aging U.S. population, health care spending over the next decade is projected to outpace the gross domestic product (GDP) by slightly more than 1 percent.
That's what a study of health care spending trends by the Centers for Medicare and Medicaid Services says. CMS expects last year's increase to clock in at 5.5 percent when all the numbers are tallied. Looking ahead, CMS projects a 5.8 percent annual growth rate through 2024—1.1 percent higher than the rate projected for the GDP.
"After six years of national health spending growth hovering near historically low rates, we're projecting faster growth in health spending over the next decade reflecting expanded insurance coverage under the ACA, expectations of continued improvements in the economy, and population aging," says Sean Keehan, the study's lead author. "However, these projected growth rates are significantly lower than those observed over the three decades prior to the recent recession."
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Keehan says the projected rate for the coming decade is significantly lower than the sector's historical rate of about 9 percent a year, dating back to 1978. The rate reached a historic low of 4 percent a year during the recession (2008-2013).
The 2014 rebound (to $3.1 trillion) doesn't presage another rapid escalation of the sector's growth, the study argues, because myriad actions taken since the recession will offset trends pushing spending higher.
This year's increase is expected to be in the vicinity of 5.3 percent, where it will remain for three years before inching upward again. Once the economy absorbs the newly insured and policymakers put the brakes on the current spike in prescription drug costs, the nation's spending on health care will enter a moderate period, the study predicts.
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Dan Cook
Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.
