U.S. Healthcare Spending Projected to Climb Swiftly

Christopher Cheney, February 16, 2017

Healthcare spending is expected to represent 19.9% of gross domestic product by 2025, according to government economists and actuaries. It accounted for 17.8% of GDP in 2015.

By 2025, healthcare spending is projected to account for one-fifth of the country's economic activity, according to an annual report based on federal data.

National health expenditures are projected to grow "at an average annual rate of 5.6% for 2016 – 2025 and represent 19.9% of gross domestic product by 2025," according to the report published online Wednesday by Health Affairs.

Healthcare spending accounted for 17.8% of GDP in 2015.

Data for the report, "National Health Expenditure Projections, 2016-25: Price Increases, Aging Push Sector to 20 Percent of Economy," was drawn from the Centers for Medicare & Medicaid Services and the Department of Commerce.

The findings are slightly more optimistic than the analysis of last year's national health expenditure projections. In last year's report, national healthcare spending was projected to grow at a 5.8% annual rate and account for 20.1% of GDP by 2025.

One of the reasons for the modestly rosier scenario is actual and projected slower growth in medical service prices, the lead author of this year's report said Wednesday during a conference call with members of the media.

"Growth in medical prices—especially for 2016, 2017, and 2018 were a little bit slower in this year's report than they were in last year's report," said Sean Keehan, an economist in the CMS Office of the Actuary, and the report's lead author.

Christopher Cheney

Christopher Cheney is the senior finance editor at HealthLeaders Media.

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