CMS Releases National Health Expenditures Projections for 2018-2027

Health spending to GDP is expected to increase from 17.9% in 2017 to 19.4% in 2027, as recently announced by the Centers for Medicare & Medicaid Services (CMS) Office of the Actuary.  Actual ratios likely are higher than reported since official National Health Expenditures (NHEs) may not include all health spending such as non-prescription vitamins, supplements, Yoga classes, and other health-related expenditures generally not covered under government or private insurance programs.

According to CMS, from 2018 to 2027:

• Total national health spending is projected to grow at an average annual rate of 5.5 percent,
reaching nearly $6.0 trillion by 2027.

• Health spending is projected to grow at a rate of 0.8 percent faster than Gross Domestic
Product (GDP) per year, and the health share of GDP is expected to increase from 17.9 percent
in 2017 to 19.4 percent by 2027.

• Prices for health care goods and services are projected to increase at a rate of 2.5 percent,
compared to 1.1 percent for 2014-2017.

• Average annual spending in Medicare is expected to grow 7.4 percent due to projected
enrollment growth. In comparison, average annual spending in Medicaid is expected to grow at
a rate of 5.5 percent, and in private health insurance at a rate of 4.8 percent.

• The share of health care spending sponsored by federal, state, and local governments is
expected to increase by 2 percent, reaching 47 percent by 2027. This projected increase is
primarily due to expected growth in Medicare enrollment.

• The share of individuals with health insurance coverage is expected to remain stable, at around
90 percent.

The Office of the Actuary in the Centers for Medicare & Medicaid Services annually produces projections of health care spending for categories within the National Health Expenditure Accounts, which track health spending by source of funds (for example, private health insurance, Medicare, Medicaid), by type of service (hospital, physician, prescription drugs, etc.), and by sponsor (businesses, households, governments).

Click on this web page to retrieve the official 2018-2027 NHE Projections.

Until next time,

Andrew Herman, President
AH Insurance Services, Inc.