Driven by an aging USA population and other economic and demographic factors, national health spending is projected to climb to 19.7% of the economy over the next 8 years, up from 17.9% in 2016, according to new estimates released Wednesday from CMS and published online in Health Affairs. In any given year, roughly half of health care spending is on 5 percent of Americans.
Prices for medical goods and services are also forecasted to grow from historically low rates of 1.1 percent per year to 2.5 percent per year for 2017-26, with prescription drugs the fastest growth of 6.3 percent per year. This pace has spending in the health care sector outpacing growth in the economy as a whole: during that same time period, total US gross domestic product is anticipated to increase 4.5% per year.
Healthcare spending is projected to eat an even bigger slice of the US economy in the next eight years, according to projections released today by the Centers for Medicare & Medicaid Services.More news: Here's the list of India's top 5 smartphone players
"It's very clear that the aging of the population has a significant influence on Medicare enrollment and shifts out of private health insurance".
When looked at from this perspective, age accounts for a smaller percentage of growth than the other factors, Cuckler said, "because, as you have continuing of the Baby Boom generation entering Medicare, you have relatively younger and healthier folks entering into the program in increasing numbers". This mounting increase is driven by higher drug prices and the more prevalent use of specialty drugs.
"Although there remains considerable uncertainty regarding the future of health policy, we expect health spending growth to increase over this next decade as a result of economic and demographic trends", says Gigi Cuckler, an economist in the Office of the Actuary at CMS and lead author of the Health Affairs study.More news: Ice hockey: Women's knockout round set with Canada on top
The CMS economists who co-wrote the study also stated that spending growth in Medicare and Medicaid is a substantial contributor to the faster projected overall growth in national health spending through 2026.
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The report also found that by 2026, federal, state and local governments are projected to finance 47 percent of national health spending, up from 45 percent in 2016. Government actuaries expect the number of people without health insurance to increase slightly after Republicans lifted the ACA's penalty for going uninsured late past year. The percent of those insured is expected to fall slightly (from 91.1% in 2016 to 89.3% in 2026), in part because of the mandate's repeal. CMS said the projections rely on the current-law framework and assume no legislative changes over the decade.More news: CNN analyst breaks down crying while talking about Florida shooting