U.S. healthcare spending on pace to top $7 trillion by 2031
Annual U.S. healthcare spending will reach nearly $7.2 trillion in 2031, growing faster than the country’s economy through the start of the next decade, according to a government estimate.
Health expenditures are projected to rise to 19.6% of gross domestic product, up from 18.3% in 2021, according to an analysis published Wednesday in the journal Health Affairs. The figures tally both government and private spending.
The U.S. spent $4.3 trillion on healthcare in 2021, more relative to the size of its economy than any other developed country. The new estimates from the Centers for Medicare and Medicaid Services show that trend is set to persist as outsize health expenses drag on taxpayers, businesses and families.
Spending on Medicare, the health program for older and disabled people, is expected to rise faster than in the private sector, averaging 7.5% a year. The gains are due in part to the last wave of enrollment by the baby boomer generation, researchers said.
The U.S. is taking some steps to rein in outlays.
Medicare Advantage was conceived to give seniors wider choices and lower the rapid increase in the nation’s healthcare spending. It’s succeeded in one, but not the other.
Under the Inflation Reduction Act that was passed last year, Medicare will negotiate with drugmakers over the prices of some products for the first time. Other provisions of the legislation will lower out-of-pocket costs for Medicare enrollees who get drug coverage through the program next year.
But overall, the changes won’t save money for the Medicare program itself until 2031, the researchers said.
The number of Americans with health insurance reached a record high last year, the researchers estimated. But millions are set to lose coverage under Medicaid, the health program for low-income people, as COVID-era rules that bolstered enrollment expire.
Medicaid enrollment peaked at more than 90 million in 2022, and it’s expected to drop to 81.1 million by 2025, according to the research.
