Skip to main content

News

Healthcare Spending Accelerating in U.S. as Prices, Incomes Rise

By John Commins  
   February 14, 2018

Prescription drugs will see the fastest average annual spending growth over the eight years, at 6.3% per year, growing from $360 billion in 2018 to $605 billion in 2026, largely because of increased spending on specialty drugs.

The insured share of the population is expected to decline slightly from 91.1% in 2016 to 89.3% in 2026, due to the repeal of the Affordable Care Act’s individual mandate.

Here is a chronological look at projected trends:

2018

  • National health spending growth is projected to increase to 5.3%, up from 4.6% in 2017.
     
  • Medicaid spending growth is projected to increase 4 percentage points, at a projected rate of 6.9%, due to the growth in health insurance spending as a result of smaller risk-mitigation recovery payments from the previous year.
     
  • Private health insurance spending growth is projected to decelerate to 4.8%, down from 5.6% in 2017, due to slower growth in the net cost of insurance in the Marketplace.
     
  • Prescription drug spending growth is anticipated to accelerate from 2.9% in 2017 to 6.6% in 2018, based on the expectation that the dollar value of drugs losing patent protection is less than in previous years.

2019–20

  • National health spending growth is projected to average 5.5%, a slight acceleration from 5.3% in 2018, as a result of faster projected average growth in Medicare spending not fully offset by slower average growth in private healthcare insurance spending.
     
  • Compared to 2018, Medicare spending is projected to grow 2 percentage points faster on average at 8%, reflecting accelerated physician incentive payments under MACRA, and projected growth in the use and intensity of Medicare goods and services.
     
  • Private health insurance spending is projected to slow on average to 4.1%, from 4.8 percent in 2018, due in part to the repeal of the individual mandate.
     
  • The number of uninsured people is projected to increase to 32.7 million by 2020, rising from 30 million projected for 2018.

2021–26

  • National health expenditure growth is projected to accelerate and average 5.7%, up from 5.5% projected for 2019–20.
     
  • Average Medicare and Medicaid spending growth (7.7% and 6.1%, respectively) will continue to outpace that of private health insurance (4.7%) due to the aging of the population, including continued strong enrollment growth.
     
  • In 2026, 47% of national health spending is projected to be sponsored by federal, state, and local governments, up from 45% in 2016. This reflects the shifting demographics including the continued transition of Baby Boomers to Medicare.
     
  • The projected share of health spending by businesses, households, and other private revenues is expected to fall 2 percentage points, from 55% in 2016 to 53% in 2026.

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.


Get the latest on healthcare leadership in your inbox.