Medicare Medicaid Financing Forecast
Decade of Annual Growth Projected for National Health Spending
By 2027, federal, state and local governments are projected to finance 47 percent of national health spending, an increase of 2 percentage points from 45 percent in 2017.
February 20, 2019
National health expenditure growth is expected to average 5.5 percent annually from 2018-2027, reaching nearly $6.0 trillion by 2027, according to a report published today by the independent Office of the Actuary at the Centers for Medicare & Medicaid Services (CMS).
Growth in national health spending is projected to be faster than projected growth in Gross Domestic Product (GDP) by 0.8 percentage points over the same period. As a result, the report projects the health share of GDP to rise from 17.9 percent in 2017 to 19.4 percent by 2027.
The outlook for national health spending and enrollment over the next decade is expected to be driven primarily by:
- Key economic factors, such as growth in income and employment, and demographic factors, such as the baby-boom generation continuing to age from private insurance into Medicare.
- Increases in prices for medical goods and services (projected to grow 2.5 percent over 2018-2027 compared to 1.1 percent during the period of 2014-2017).
Similar to the findings in last year’s report, the report found that by 2027, federal, state and local governments are projected to finance 47 percent of national health spending, an increase of 2 percentage points from 45 percent in 2017. As a result of comparatively higher projected enrollment growth in Medicare, average annual spending growth in Medicare (7.4 percent) is expected to exceed that of Medicaid (5.5 percent) and private health insurance (4.8 percent).
READ HIGHLIGHTS about projected health insurance enrollment and national health expenditures by sector and payer.
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