News: CMS projects healthcare spending to reach $6.8 trillion by 2030

Between 2025 and 2030, healthcare spending is expected to increase at an average rate of 5.3% annually, reaching a total annual spending level of $6.8 trillion by 2030, according to an analysis conducted by CMS and published in HealthAffairs.  Healthcare spending’s share of gross domestic product (GDP) is expected to be 19.6% in 2030, HealthLeaders reported.

The analysis features expected annual health expenditures and projected hospital spending growth. Additional expenditure projections include:

• In 2020, unprecedented financial stimulus from the federal government and insurance market upheaval drove national health expenditure growth to a nearly two-decade high of 9.7%. In 2020, the health spending share of the gross domestic product (GDP) increased 2.1% from 2019, to 19.7%.
• In 2021, national health expenditure growth is expected to decline sharply to 4.2%, largely due to reductions in federal coronavirus relief funding. The slower growth rate in healthcare spending combined with growth in GDP, which rebounded to 9.6%, is expected to result in a 0.9-% drop in the healthcare spending share of GDP to 18.8%. Healthcare spending is expected to total $4.3 trillion.
• In 2022, national health expenditures are expected to increase at 4.6%, driven in part by higher healthcare prices linked to inflation in the economy. Healthcare spending is expected to total $4.5 trillion.
• National health expenditures are expected to increase 5.0% and 5.1% in 2023 and 2024, respectively. These growth rates are tied to an expectation that patient care patterns will return to pre-pandemic levels. From 2022 to 2024, healthcare spending’s share of GDP is expected to be just over 18%.
• The healthcare spending impact of the pandemic is expected to wane progressively from 2021 to 2024.

The analysis also includes projections for hospital spending growth, which shows rebounding demand for care in 2022 followed by reductions in 2023 and 2024 as healthcare needs normalize.

Traditional factors are expected to influence healthcare spending trends from 2025 to 2030, but there is considerable uncertainty associated with the pandemic, the co-authors wrote.

“Economic and demographic factors are anticipated to reemerge as the most influential drivers of health-sector trends, resulting in more stable health spending trends and a slowly increasing share of the economy devoted to healthcare. However, this outlook is contingent on a virus that has evolved and surprised at every turn—and could do so again. So although a normalization of health spending and the economy underlie this projection, only time will tell how normal the next decade is,” they wrote.

Editor’s note: This article was originally published by HealthLeaders. The CMS analysis can be found here.