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National healthcare spending growth will outpace growth of gross national product, data shows

Insured population, however, is expected to shrink from 91.1 percent in 2016 to 89.3 percent in 2026 thanks to the repeal of the individual mandate.

Beth Jones Sanborn, Managing Editor

Healthcare spending is on track to tick up, eclipsing the growth of the gross domestic product and propelling the health share of the economy to 19.7 by the year 2026, according to new estimates released from the Office of the Actuary at the Centers for Medicare and Medicaid Services and published by Health Affairs.

Fueled by both economic and demographic factors such as changes in projected income growth and swelling Medicare enrollment as baby boomers flood the program, national health spending is expected to grow at a rate of 5.5 percent for 2017–26, outpacing projected growth in gross domestic product by one percent. The health share of the economy will hit 19.7 percent by 2026, a nearly two percent rise from 17.9 percent in 2016, the data showed.

[Also: Health spending growth expected to outpace gross domestic product growth for next decade, CMS data shows]

Prices for medical goods and services are also forecasted to grow from historically low rates of 1.1 percent per year to 2.5 percent per year for 2017–26, with prescription drugs the fastest growth of 6.3 percent per year. That figure is owed largely to increased spending on specialty drugs. 

The insured population, however, is expected to shrink from 91.1 percent in 2016 to 89.3 percent in 2026 thanks to the repeal of the individual mandate, the study said.

"Although there remains considerable uncertainty regarding the future of health policy, we expect health spending growth to increase over this next decade as a result of economic and demographic trends," says Gigi Cuckler, an economist in the Office of the Actuary at CMS and lead author of the Health Affairs study. "Moreover, it is expected that employers, insurers, and other payers will continue to work to manage the use and cost of health care goods and services."    

Figures for 2017 show national health spending has been on an upward roll already, with national health spending projected to have grown 4.6 percent in 2017, up from 4.3 percent

Medicare spending growth climbed to 5.0 percent in 2017 from 3.6 percent in 2016, largely due to faster projected growth in spending per beneficiary. However,  Medicaid spending growth grew at a slower pace of 2.9 percent in 2017. A spike of 3.9 percent in 2016 was attributed to a one-time increase in Medicaid's risk-mitigation recovery payments, the study said.

Twitter: @BethJSanborn
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