Health care spending in the U.S. is anticipated to increase significantly, with federal actuaries projecting that it will reach $7.7 trillion by 2032. This is a substantial $2.9 trillion increase from the previous year. The projected growth in spending during the 2023-2032 period is expected to be 5.6% annually, which is higher than the anticipated 4.3% annual inflation rate. As a result, health care is forecasted to represent nearly 20% of the GDP by 2032, up from 17.3% in 2022.
In 2023, health care spending already spiked by 7.5%, reflecting an increased use of health care services post the COVID-19 public health emergency. These projections suggest that health care spending and health insurance enrollment trends are likely to be influenced by legislative provisions enacted in response to the pandemic.
For instance, Medicaid enrollment is projected to decrease from 91.2 million in 2023 to 79.4 million in 2025 following the expiration of the continuous enrollment requirement of the Families First Coronavirus Response Act of 2020. The actuaries noted that Medicare is expected to experience the highest ten-year average spending growth rate due to rising enrollment in the program.
Out-of-pocket spending is expected to slow during 2025-2026, with annual growth in patient spending on drugs declining to 3.7% in 2025. This is attributed to the Inflation Reduction Act implementing a $2,000 annual Part D out-of-pocket spending cap and lower gross prices for negotiated drugs. Actuaries also predict reductions in spending through manufacturer discounts for lower-income patients in 2025 and through drug price negotiation and limits tied to inflation.