Expect Modest Growth in Health Spending through 2013

New estimates released by CMS project aggregate health care spending in the US will grow at an average annual rate of 5.7 percent for 2011 through 2021, or 0.9% faster than the expected growth in GDP.  The health care share of GDP by 2021 is projected to rise to 19.6 percent, from its 2010 level of 17.9 percent.

These projections indicate an increase in spending over the near historic low growth rates of recent years. Growth in consumers’ use of health services remained sluggish in 2011. And the slow economic recovery, modest growth in disposable personal incomes, insurance coverage, and employment rates will continue to limit expenditures through 2012 and 2013.

If the coverage expansions associated with the Affordable Care Act kick in, the growth rate for health spending is projected to increase 7.4 percent in 2014, with notable increases in spending on physician services and prescription drugs by the newly insured. Throughout the latter half of the projection period, incomes are expected to be higher, and a large number of baby boomers are anticipated to be receiving coverage under Medicare.

By 2021, government spending for health care will reach nearly 50 percent of total national health expenditures.  The federal government will account for two-thirds of that share.

Learn more at Health Affairs.  The full article provides an analysis of how Americans are likely to spend their health care dollars in the coming decade, with projections for spending by different sectors, payers, and sponsors.

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