Health care to consume nearly 1 in 5 dollars spent by 2028

That is the projection from CMS’ Office of the Actuary. Keehan et al. (2020) write in Health Affairs:

National health expenditures are projected to grow at an average annual rate of 5.4 percent for 2019–28 and to represent 19.7 percent of gross domestic product by the end of the period. Price growth for medical goods and services is projected to accelerate, averaging 2.4 percent per year for 2019–28, which partly reflects faster expected growth in health-sector wages. Among all major payers, Medicare is expected to experience the fastest spending growth (7.6 percent per year), largely as a result of having the highest projected enrollment growth. The insured share of the population is expected to fall from 90.6 percent in 2018 to 89.4 percent by 2028.

Note that these figures use a current law approach, which assumes no changes to the current legislation already on the books. Further, these numbers do not take into account the economic impact of COVID-19.

The authors project that growth in health spending will be primarily driven by a rebound in the prices for medical services and goods, largely due to projected above average growth in health-sector wages. this assumption, however, could prove false if COVID-19 reduces wages for the economy as a whole and the supply of individuals willing to work in the health care industry goes up.

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