Health care spending in the U.S. is expected to reach $7.7 trillion by 2032, marking an increase of $2.9 trillion from last year. The annual growth rate is projected at 5.6% during the period from 2023-2032, exceeding the anticipated 4.3% annual inflation rate. Healthcare is expected to account for nearly 20% of the Gross Domestic Product (GDP) by 2032, up from 17.3% in 2022.
In 2023, healthcare spending is estimated to have grown by 7.5% due to increased use of healthcare services following the end of the COVID-19 public health emergency. These predictions take into account the impact of changes in health care spending and health insurance enrollment trends resulting from the response to the COVID-19 public health emergency from 2023-2032.
For instance, Medicaid enrollment is expected to decrease from 91.2 million in 2023 to 79.4 million in 2025 after the continuous enrollment requirement of the Families First Coronavirus Response Act of 2020 expires. The actuarial projections also show that Medicare will have the highest ten-year average spending growth rate due to increased enrollment in the program.
Out-of-pocket spending is expected to slow down during 2025-2026, with a drop in annual growth rate in patient spending on drugs to 3.7% in 2025. This decrease is attributed to the Inflation Reduction Act’s implementation of a $2,000 annual Part D out-of-pocket spending cap and lower gross prices for negotiated drugs.
Healthcare spending and health insurance enrollment trends for the next decade are expected to be influenced by legislative provisions enacted in response to the COVID-19 public health emergency. These include reductions in spending through manufacturer discounts for lower-income patients in 2025 and drug price negotiation and limits on price increases tied to inflation.