The Centers for Medicare & Medicaid Services is predicting an average annual growth rate of 5.6% in health care expenditures over the next 10 years – but with a big asterisk.

The projections are based on current law and make no assumptions about potential repair, repeal, or replacement of the Affordable Care Act, leaving the projections to serve as a benchmark rather than a forecast.

Assuming no changes to the current law, the average annual growth in health care spending is projected to outpace the average growth of gross domestic product by 1.2 percentage points from 2016 to 2025. As a result, health care’s share of the economy is projected to grow from 17.8% in 2015 to 19.9% in 2025, according to Sean Keehan and his colleagues in the CMS Office of the Actuary (Health Affairs. 2017. doi: 10.1377/hlthaff.2016.1627 ).

In the short term, growth rates in 2016 and 2017 are the slowest in the forecast period, at 4.8% and 5.4%, respectively. For 2018 and beyond, the growth rate picks up, with both Medicare and Medicaid projected to grow faster and more rapidly, compared with private health insurance spending.

The CMS actuaries attribute this to the increase in Medicare spending over recent historic lows, a Medicaid population that is expected to become older and sicker, additional Baby Boomers entering the Medicare program, and decreased demand for health services as prices increase.

The percentage of population with either public or private health insurance coverage is expected to grow under current law from 90.9% in 2015 to 91.5% in 2025, “mainly a result of continued growth in enrollment in private health insurance – in particular, employer-sponsored health insurance – in the first year of the projection period, as well as enrollment growth in public programs throughout the period,” Mr. Keegan and colleagues wrote.


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