Access, quality, and cost are the equivalent of a three-legged stool in health care policy. A steady increase in the overall size of the overall U.S. population and dramatic growth in the number and proportion of individuals age 65 and older, a group characterized by increased morbidity, point to a steady escalation of spending on health care. The Centers for Medicare & Medicaid Services (CMS) on March 28 of this year released the 2021-2030 National Health Expenditure (NHE) report, prepared by the CMS Office of the Actuary. It presents health spending and enrollment projections for the coming decade. The report notably shows that despite the increased demand for patient care in 2021, the growth in national health spending is estimated to have slowed to 4.2%, from 9.7% in 2020, as supplemental funding for public health activity and other federal programs, specifically those associated with the COVID-19 pandemic declined significantly.
The NHE has been published annually since 1960. It often is referred to as the “official” estimates of U.S. health spending. These historical and projected estimates of NHE measure total annual U.S. spending for the delivery of health care goods and services by type of good or service (e.g., hospital, physician, prescription drugs), type of payer (e.g., private health insurance, Medicare, Medicaid), and type of sponsor (e.g., businesses, households and federal/state governments). The NHE report also includes spending on government public health; investment in structures and equipment; and non-commercial research, as well as information on insurance enrollment and uninsured estimates.
The report finds that annual growth in national health spending is expected to average 5.1% over 2021-2030, and to reach nearly $6.8 trillion by 2030. Growth in the nation’s Gross Domestic Product (GDP) also is projected to be 5.1% annually over the same period. As a result of the comparable projected rates of growth, the health share of GDP is expected to be 19.6% in 2030, nearly the same as the 2020 share of 19.7%. Selected highlights in national health expenditures by major payer include:
Medicare
Spending growth is projected to average 7.2% over 2021-2030, the fastest rate among the major payers, and also is projected to exceed $1 trillion for the first time in 2023. By 2030, Medicare spending growth is expected to slow to 4.3% as Baby Boomers are no longer enrolling.
Medicaid
Average annual growth of 5.6% is projected for Medicaid spending for 2021-2030. Medicaid spending growth is expected to have accelerated to 10.4% in 2021, associated with rapid gains in enrollment. Spending is projected to exceed $1 trillion for the first time in 2028.
Private Health Insurance And Out-of-Pocket Expenditures
For 2021-2030, private health insurance spending growth is projected to average 5.7%. Out-of-pocket expenditures are projected to grow at an average rate of 4.6% over 2021-2030 and to represent 9% of total spending by 2030 (ultimately falling from its current historic low of 9.4% in 2020).
Impact Of COVID-19 On Employer-Sponsored Health Insurance Coverage
When the COVID-19 pandemic began, there was a concern that millions of Americans could lose employer-sponsored health insurance coverage and become uninsured. Researchers from the Urban Institute released a report in March 2022 based on an analysis of data from the National Health Interview Survey (NHIS), the Current Population Survey (CPS), and the Health Reform Monitoring Survey (HRMS). Among their findings are the following:
The uninsurance rate among nonelderly adults (ages 18 to 64) remained flat between early 2019 and early 2021, according to all three surveys.
Gains in public coverage offset estimated private coverage losses on all three surveys, but the CPS showed much smaller public and private coverage changes than the HRMS and the NHIS.
Administrative data on Medicaid enrollment show substantial changes consistent with the estimates reported on the NHIS and the HRMS.