Health-Care Spending May Outgrow National GDP by 2025

According to a report by the U.S. Centers for Medicare and Medicaid Services (CMS), health-care spending is expected to rise to nearly 20 percent of all U.S. spending by 2025, and will outgrow the national gross domestic product (GDP) by 1.3 percent. The report cited several factors for these increases, including economic inflation and the aging of the baby-boom generation.

The current report projects health-care spending will grow to 19.9 percent of the U.S. economy by 2025 – representing a 5.4 percent increase from the 2016 projections, when the estimate for health-care expenditure was $3.4 trillion.

CMS’s projections were made assuming that the Affordable Care Act (ACA) would stay intact through 2025; the possibility of change or repeal is not accounted for in the projections. The ACA has allowed lower-income Americans to purchase health insurance privately in more than 30 states, and, if it remains in place, the overall insured rate of the population is expected to reach 91.5 percent in 2025, up from 90.9 percent in 2015, the report said.

Source: Reuters, February 15, 2017; CMS, “National Health Expenditure Projections 2015-2025,” February 2017.