How much is health spending expected to grow?

This chart collection explores the ways health spending has changed over time and projections of health spending in the future. An earlier brief also explored trends in this topic. 

U.S. health care spending per capita has risen at historically low rates recently, but is expected to pick up

Health spending in the U.S. had grown at historically low levels starting in 2008, likely due to a combination of the economic downturn and slow recovery and higher patient cost-sharing, as well as structural changes to the health system. Starting in 2014, health spending grew faster (4.4% per capita), particularly due to more people having health coverage from the ACA. Projections suggest that health-spending growth will continue at a higher rates than in recent years (averaging around 5% per year on a per capita basis) but is unlikely to reach the double-digit growth of previous decades.

Growth in prescription spending had slowed, but increased rapidly in 2014 and 2015

New specialty drugs are having an upward effect on spending, according to CMS, echoing other analyses by PwC, Express Scripts and IMS Health. In 2015, pharmaceutical spending grew 8% on a per capita basis, but analysis of CMS projections suggests growth in per capita drug spending will decelerate to 4.0% in 2016 and 5.5% in 2025.

Per capita out-of-pocket spending grew slowly in 2014, but picked up again in 2015

The insurance coverage gains since 2015 have given more people access to health care, which is likely increasing overall spending.

Out-of-pocket spending for Rx drugs remained flat in 2015, physician services spending grew

In 2015, per capita out-of-pocket spending on prescription drugs was similar to the previous year, however physician services are estimated to have increased slightly.

An annual percentage point difference in growth rates makes a very large difference in spending over time

What may seem to be small differences in growth rates are very meaningful over time. Per capita expenditures are projected to grow from  $10,345 in 2016 to $16,032  in 2025, which is an average annual growth rate of 5 percent. If growth rates were 1 percentage point lower each year over that same period, per capita spending would be $1,323 lower than expected. If growth rates were 1 percentage point higher each year, spending would rise to $17,460 per person in 2025, which would increase total health spending by nearly $500 billion in 2025 alone and by about $2 trillion in the 9-year period.

Health spending projections are now lower than previous projections

Health spending projections are now lower than previous projections.

Long-term health spending is difficult to project

Longer-run trends are harder to predict, and this is particularly true in a time when the health system is changing rapidly. When CMS published the 2005 baseline projections (in 2006), health spending was then expected to reach more than $3.5 trillion by 2013 and over $4 trillion by 2015. Actual health spending has been much lower, at $2.9 trillion in 2013, and was $3.2 trillion in 2015.