On Tuesday, the Centers for Medicare & Medicaid Services (CMS) Office of the Actuary
released projections of national health expenditures (NHE) and health insurance enrollment for 2022 through 2031. CMS projects that through 2031, NHE will grow by an average 5.4% per year and outpace the 4.6% average annual growth in gross domestic product. The insured population reached 92.3% in 2022 and is expected to hold through 2023. Although Medicaid expenditures are projected to grow by 5.0% from 2022 through 2023, enrollment is expected to decline between 2023 and 2025 due to the end of the continuous coverage provision.
CMS actuaries expect provisions of the
Inflation Reduction Act (IRA) to result in out-of-pocket prescription drug savings for Medicare Part D enrollees. Prescription drug spending for these enrollees is projected to decline by 5.9% in 2024, 4.2% in 2025, and 0.2% in 2026. The annual expenditure for Medicare is projected to grow by an average 7.5% per year. Although Medicare spending is projected to grow 8.9% in 2025, the actuaries expect it to decline to 6.8% in 2030 and 2031. These expectations align with the implementation of the
IRA’s out-of-pocket spending cap for Part D enrollees and drug price negotiations, respectively.
Total retail prescription drug spending is projected to grow on average 4.6% per year between 2022 and 2031. Private health insurance spending is projected to grow on average 5.4% per year between 2022 and 2031. In the same period, hospital spending is expected to grow by 5.8% on average per year, while physician and clinical services spending is projected to average 5.3% per year.
Although health spending will generally grow through 2031, NHE projections will continue to be impacted by individual health behavior and the implementation of federal provisions that may result in savings for beneficiaries.
See the accompanying article in
Health Affairs.
