Health care spending to grow by 5.1% annually through 2030: CMS

Annual spending on health care will reach $6.8 trillion by 2030, accounting for roughly the same share of the Gross Domestic Product (GDP) as it does today, according to new government data.

The annual National Health Expenditure (NHE) report from the Centers for Medicare & Medicaid Services predicts that health care spending will grow by an average of 5.1% annually through the end of the decade. But since GDP is expected to grow at about the same rate, health care spending’s share of GDP will inch up only slightly, to 19.7%, from its current level of 19.6%.

Published annually since 1960, the NHE measures spending according to the type of good or service—e.g. physician services and prescription drugs—payer, and type of sponsor (businesses, households and federal or state governments). It also includes spending on public health, investment in structures and equipment, and noncommercial research.

The report notes that many of the near-term expected trends in spending are tied to the COVID-19 public health emergency. In 2021 spending for “other federal programs and public health activity”—the category that includes federal supplemental spending for COVID-19—is expected to have declined to $286.8 billion from its 2020 level of $417.6 billion.

Supplemental funding is predicted to continue falling through 2024, bringing the government’s share of national health spending down to 46% from its all-time high of 51% in 2020.

Among major payers, Medicare is expected to see the fastest annual growth at 7.2%, followed by private health insurance (5.7%), Medicaid (5.6%), and out-of-pocket expenditures (4.8%). Medicare spending is thought to have grown by 11.3% in 2021 due to an assumed acceleration in the program’s utilization. But increases are expected to moderate later in the decade due to lower fee-for-service payment updates and the phasing in of sequestration cuts.

The NHE forecasts hospital spending growth to average 5.7% through 2030, although the increases for 2022 is expected to be 6.9% as demand for hospital services remains elevated due to COVID-19 and price growth is predicted to accelerate. But growth will slow to a more normal range of 5.5% to 5.6% for the rest of the decade.

Annual spending on physician and clinical services is projected to increase by an average of 5.6% from 2021 to 2030, up slightly from 2020’s rate of 5.4%. For 2022 growth is expected to come in at 6.2% as the pandemic eases and consumers return to more typical use patterns, but ease to 5.5% in the following years.

Spending growth for prescription drugs is predicted to increase at an average rate of 5% during 2021-2030. The 2022 increase is expected to be 4.3%, down from the 2021 rate of 4.7%, mostly due to declines in Medicaid enrollment. New drug approvals expected from 2021 through 2026 are forecast to affect prescription drug use and prices through the rest of the decade.

The full NHE report and data are available on CMS’s website at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsProjected