Health Affairs Web First: Moderate Health Spending Growth Projections, 2015–25

New estimates released on July 13 from the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS) project an average rate of national health spending growth of 5.8 percent for 2015–25, exceeding the expected average growth in gross domestic product (GDP) by 1.3 percentage points per year. As a result, the health share of the economy is projected to be 20.1 percent at the end of this period, up from 17.5 percent in 2014. The study also finds that the percentage of the US population that is uninsured is expected to be 8 percent in 2025, down from about 11 percent in 2014.

The authors found that projected national health spending growth, though faster than observed in recent history, is slower than in the two decades before the recent recession, in part because of trends such as increasing cost sharing in private health insurance plans and various Medicare payment update provisions. An expected noteworthy shift at the end of the next decade is a change in who ultimately pays for the nation's health care. By 2025, 47 percent of health spending is projected to be sponsored by federal, state, and local governments — almost 3 percentage points higher than 2014.

In contrast, the projected share of health spending sponsored by businesses and households in 2025 is expected to be 53 percent, approximately 3 percentage points lower than in 2014. This expected higher share of spending by governments reflects the full impacts from the Affordable Care Act's coverage expansions, the continued transition of the baby-boom generation into Medicare, and the growing gap between dedicated Medicare financing and program outlays.

Every year CMS's Office of the Actuary releases an analysis of how Americans are expected to spend their health care dollars in the decade ahead. The predicted 5.8 percent growth rate is identical to the rate predicted for 2014–24 in the Office of the Actuary's 2014 report, published last year in Health Affairs.

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