CMS Projects Exponential Growth of Healthcare Spending

A new report from CMS recently published in Health Affairs, states that the US is projected to spend $5.96 trillion on healthcare in 2027. This would be a 19.4 percent share of the gross domestic product (GDP). In 2017, healthcare spending accounted for 17.9 percent of the GDP.

The largest catalyst behind this projected growth is the aging population. With people living longer and reaching the age of Medicare eligibility, the bulk of this growth is expected to be in Medicare, with 7.4 percent over this period. The private market looks to grow 4.8 percent in this same period.

This, of course, is what is projected with no change to the current healthcare system and does not account for any suggested policy changes.

Some of this increase is proposed due to changes in income growth, which will affect private insurance and out-of-pocket spending. Also, the rising cost of medical goods and services contribute heavily to this projected spending growth.

Currently projected increase between 2017 and 2019 account for around a $2 billion increase per year. From 2016 to 2017, final figures show an increase of a little over $1 billion in spending.

These are of course all educated projections based on current standards. How do you think this could change in the next 3 years? The next 5 years? What effect might the regulation of drug prices have on these numbers? Expansion of Medicaid is an additional factor.

The bottom line is, with so many proposed changes to US Healthcare on the table, there is no telling where this projection falls on the spectrum.


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