CMS Releases National Health Expenditure Projections
On June 12th, the Centers for Medicare and Medicaid Services (CMS) recently released their National Health Expenditure projections and new historical data. This report examines trends in health spending from the last year and projects them forward for the years 2023-2032.
The report shows overall national healthcare spending is steadily growing, even after the end of the COVID-19 Public Health Emergency. Health spending grew by 7.5% in 2023. This was largely due to an increase in the insured population and a greater general willingness to consume healthcare services. According to the report, 93.1% of Americans had health insurance in 2023.
Spending on physician and clinical services is expected to have increased by 8.4 percent in 2023 (totaling $959.1 billion), which far outpaces 2022’s 2.7 percent growth rate. The rate of price growth for these services is estimated to have remained somewhat low at 0.5 percent, suggesting utilization, not price increases is behind the accelerated growth rate. For 2024, spending growth for physician and clinical services is projected to decelerate to 4.9 percent with Medicaid spending on these services expected to drop by 4.8 percent, consistent with projected declines in enrollment for this program.
Spending by the Medicare program was also high. Medicare expenditures were 8.4 percent growth in 2023, up from 5.9 percent in 2022. The report attributes this to “Medicare spending per beneficiary growth and increased hospital spending, as well as continued increases in Medicare Advantage (MA) enrollment.” However, spending by commercial health insurance was higher, at 11.1 percent.
The report also includes projections for 2023-2032 expenditures. Medicare is projected to have the highest ten-year spending growth rate due to an influx of retiring baby boomers. While Medicare enrollment grows along with its spending, Medicaid and private health insurance spending are expected to slow both in spending and enrollment.
Overall, National Health Expenditure forecasts show growth in the healthcare industry. The 2023-2032 average growth is expected to outpace the average GDP growth during that period, and health expenditures will grow from 17.3% of GDP to 19.7%. The use of healthcare services and projected spending will grow faster than the rest of the economy at the same time that Medicare faces a long-term financing shortfall and prescription drug spending becomes a larger part of health expenditures.
All of this suggests that decreasing health spending will continue to motivate federal healthcare policy.