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. 

After rising from historically low rates, growth in U.S. per capita health spending is expected to be moderate over time

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 moderate (averaging 4.9% per year between 2019-2017 on a per capita basis) but is unlikely to reach the double-digit growth of previous decades.

Growth in prescription drug spending has picked up from last two years and is expected to continue to grow

In 2018, growth in per capita prescription drug spending increased by 1.1% (from 0.7% growth in 2017 to 1.9% in 2018), following two years of slowed growth. Meanwhile, growth in total health spending per capita increased by 0.5% (from 3.5% in 2017 to 4% in 2018). Overall, prescription drug spending has slowed substantially since 2014 and 2015, when per capita pharmaceutical spending grew by 12.5% and 7.6%, respectively, largely because new specialty drugs came to market at the time. Looking ahead, CMS projections suggests growth in per capita drug spending will be moderate through 2027.

Per capita out-of-pocket spending has grown relatively slowly in recent years but may pick up again

Insurance coverage gains since 2014 have given more people access to health care, which is likely increasing overall spending but having a moderating effect on out-of-pocket costs. Out-of-pocket spending increased 2.2% in 2018 from the previous year and is projected to increase slightly in upcoming years.

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Out-of-pocket spending for Rx drugs, physicians and clinics, and hospitals in 2018 remained relatively similar to previous year

In 2018, per capita out-of-pocket spending on prescription drugs remained the same as the previous year ($144 per person). However, out-of-pocket spending on physician services increased slightly (from $185 per person in 2017 to $187 in 2018), as did hospital out-of-pocket spending (from $106 per person in 2017 to $107 in 2018). Spending on all three types of services is expected to increase from 2019 to 2027. 

One percentage point difference in annual spending growth rates can make a very large difference in spending over time

What may seem to be small differences in spending growth rates are very meaningful over time. Per capita expenditures are projected to grow from $11,121 in 2018 to $16,907 in 2027, which is an average annual growth rate of 4.8 percent. If growth rates were 1 percentage point lower each year over that same period, per capita spending would be $1,398 lower than expected. If growth rates were 1 percentage point higher each year, spending would rise to $18,416 per person in 2027, which would increase total health spending by over $532 billion in 2027 alone and by nearly $2.3 trillion between 2018 and 2027.

Health spending projections are now lower than previous projections

Health spending projections are now lower than previous projections.

The Peterson Center on Healthcare and KFF are partnering to monitor how well the U.S. healthcare system is performing in terms of quality and cost.

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