Healthcare will make up 19.6% of the country’s GDP

(Healthcare Economics – Maia Anderson) —   The numbers are in: The US will spend $7.2 trillion on healthcare by 2031, or 19.6% of gross domestic product (GDP), according to annual national expenditure projections released by the Centers for Medicare and Medicaid Services (CMS) on June 14.

In comparison, the US spent about $4.4 trillion on healthcare, or 17.4% of its GDP, in 2022, CMS estimated.

Rapid growth: The annual US health spend grew 4.3% in 2022, compared to 2.7% in 2021, according to CMS. In 2023, the agency expects spending to grow 5.1%. Between 2022 and 2031, CMS expects spending to grow an average of 5.4% per year.

In 2022, the US economy’s growth actually outpaced national health spending growth. But between 2022 and 2031, the economy is expected to grow 4.6% annually, or 0.8 percentage points slower than healthcare spending.

Historically high coverage: The CMS projections also include data on US insurer enrollment, and the percentage of insured people in the US reached a historic high in 2022 at 92.3%, thanks to an increase in Medicaid and ACA marketplace plans.

But with Covid-19 public health emergency protections expired, the number of Medicaid enrollees is anticipated to fall from 90.4 million in 2022 to 81.1 million in 2025, according to CMS. Even so, the agency expects more than 90% of the US population will remain insured, partially due to a projected increase in private health insurance plans “from enhanced Marketplace subsidies.”

Some more numbers:

  • Medicare spending is projected to grow 7.5% per year between 2022 and 2031, faster than other major payers, compared to 5.4% for private payers and 5% for Medicaid.
  • Hospital spending is expected to grow faster (5.8% annually) than spending on physician and clinical services (5.3%) and prescription drugs (4.6%) during that same time period.
  • Medicare spending is projected to grow 8% in 2023 (compared to 4.8% in 2022), exceeding $1 trillion.

“Recent legislation is anticipated to affect trends in health insurance enrollment and healthcare spending over the next decade,” Sean Keehan, study author and an economist in the Office of the Actuary at CMS, said in a statement. “Altogether, and consistent with its past trend, health spending for the next ten years is expected to grow more rapidly, on average, than the overall economy.”