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National Health Expenditures

A recent report from the CMS Office of the Actuary (OACT) predicted that the overall expenditure in the health care sector would grow substantially in the upcoming years. The report expects an average annual growth rate of 5.8 percent during the year 2015-2025. OACT also revealed that the overall national health care spending has reached approximately $3.2 trillion in the year 2015. Approximately, 5.5 percent increase has been witnessed in healthcare expenditure in the same year.

According to the expenditure data, the costs in the healthcare will grow faster than GDP during the next decade. This expected rise in health expenditure may result in the increase of health share spending from 17.5 percent (as in 2014) to 20.1 percent by the end of 2025.

Even though this report raises numerous concerns, there are a few favorable factors included in it, which assures that healthcare will rise above these challenges. OACT highlights that the average rate of the health care expenses in the two decades prior to 2008 was higher than the estimated growth in the upcoming decade.

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Office Of The Actuary Report

Another significant factor is that there may be 0.7 percent reduction in healthcare spending in the year 2016, due to the slowing down of Medicaid and ACA marketplace enrollments. The report also predicts that health share expenses rate will gradually decrease from 10.9 percent in 2014 to 9.9 percent in 2025; where the number of insured individuals is expected to rise by approximately 3 percent in the same period.

The estimate on Medicaid and Medicare programs were also included in the projection report. It is estimated that the Medicaid programs will have to spend approximately $12,500 for each of their beneficiaries per year by 2025, which at present is $8,000. Similarly, Medicare will have to spend an additional $6,000 for each of their beneficiaries per year in 2025, which is at the $12,000 mark in 2015. A significant rise in the number of individuals enrolled for the Medicare program is also expected by the year 2025.

OACT has also stated that the spending growth of prescription drugs will gradually decrease from 8.1 percent in 2015 to 6.3 percent in 2016. Whereas only a 1.1 percent increase in prescription drug spending growth from that of 2014’s figures is expected by the year 2025.

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