National Health Spending Projected to Grow 17.8 Percent by 2025

Between 2015 and 2025, health spending growth in the United States is projected to average 5.8 percent, to total 20.1 percent of the total U.S. economy, according to an analysis published in Health Affairs. This growth is 1.3 percentage points faster than the projected growth of the gross domestic product.

By 2025, one in five Americans is expected to be on Medicare, with an average spend of nearly $18,000 per year per beneficiary, up from $12,000 in 2015, the researchers reported. Medicaid is also projected to spend an average of nearly $12,500 per year per beneficiary, up from $8,000 in 2015, while private insurers are projected to spend $8,600 per year per beneficiary by 2025, up from $5,400 in 2015.

The report estimates that national health spending in 2015 increased slightly over 2014 (from 5.3% to 5.5%), but is expected to decelerate to 4.8 percent by the end of 2016.

“Health spending is likely to accelerate in response to improvements in economic conditions that are projected over the coming decade,” said Sean P. Keehan, an economist in the actuary’s office at the Centers for Medicare & Medicaid Services and the lead author of the report. He said that the use of high-cost specialty drugs and faster growth in drug prices are also contributing to this health spending.

The expansion of coverage under the Affordable Care Act has contributed to higher health spending, the authors noted.

Source: Keehan SP, Poisal JA, Cuckler GA, et al. National Health Expenditure Projections, 2015-25: economy, prices, and aging expected to shape spending and enrollment. Health Aff. 2016 July 13. [Epub ahead of print]