CMS projects hospital spending to grow 5.8% annually over 2015-2025
- CMS' Office of the Actuary (OACT) today published in Health Affairs that total healthcare spending growth expected to average 5.8% annually over 2015-2025.
- In addition, health spending is projected to grow 1.3 percentage points quicker than GDP per year over 2015-2025, thus resulting in the health share of the GDP predicted to rise to 20.1% by 2025 from 17.5% in 2014.
- Overall, national health expenditures are estimated to have reached $3.2 trillion in 2015.
In addition, OACT found national health spending is projected to have been 5.5% in 2015. Slower growth in such spending is expected in 2016 at 4.8% as Medicaid and marketplace enrollment slows and associated uninsured rates decline.
"In 2015, medical price inflation slowed to 0.8%, down from 1.4% in 2014. Hospital prices increased by 0.9% while price growth in physician services fell by 1.1%," the authors found.
"Hospital spending growth is expected to grow at an annual average rate of 5.8%," Sean Keehan, from CMS' OACT, said on a conference call. "This rate of growth would be faster than the last two historical years and this is because of modest increases in the use and price of hospital services."
"Also despite expanded insurance coverage provided by the marketplaces, growth in private health insurance spending on physician and clinical services is tempered somewhat over the projection period by the continued expected growth of high deductible plans which tends to disproportionately impact the utilization in this category," Keehan continued.
"The Affordable Care Act continues to help keep overall health spending growth at a modest level and at a lower growth rate than the previous two decades. This progress is occurring while also helping more Americans get coverage, often for the first time," said CMS acting Administrator Andy Slavitt said in a prepared statement. “Per-capita spending and medical inflation also remain at historically very modest levels, demonstrating the importance of continuing to reform our delivery systems.”4
Additional projections include:
- The share of health expenses that Americans pay out-of-pocket is projected to decline from 10.9% in 2014 to 9.9% in 2025; and
- Federal, state and local governments are projected to finance 47% of national health spending (up from 45% in 2014).
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