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 (4.3% 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 4.6% per year on a per capita basis) but is unlikely to reach the double-digit growth of previous decades.

Growth in prescription spending has slowed again in 2016, after increasing rapidly in 2014 and 2015

In 2016, per capita prescription drug spending grew at a slow rate (0.6%), particularly in comparison to the previous two years when new specialty drugs came on the market. In 2015, pharmaceutical spending grew 8.1% on a per capita basis and in 2014 these costs had grown 11.5%. Looking ahead, CMS projections suggests growth in per capita drug spending will be moderate through 2026.

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

The 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 for Rx drugs remained flat in 2016, while out-of-pocket spending on physician services grew

In 2016, per capita out-of-pocket spending on prescription drugs was down slightly from the previous year ($140 per person in 2016 and $142 in 2015). However out-of-pocket spending on physician services increased (from $176 per person in 2015 to $183 in 2016), as did hospital out-of-pocket spending (from $97 per person in 2015 to $101 in 2016). While prescription drug spending is expected to dip slightly in the near future, the amount that patients spending on pharmaceuticals will grow at an increasing rate from 2019 to 2026.

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 $10,724 in 2017 to $16,168 in 2026, which is an average annual growth rate of 4.7 percent. If growth rates were 1 percentage point lower each year over that same period, per capita spending would be $1,338 lower than expected. If growth rates were 1 percentage point higher each year, spending would rise to $17,613 per person in 2026, which would increase total health spending by over $508 billion in 2026 alone and by nearly $2.2 trillion in the 10-year period.

Health spending projections are now lower than previous projections

Health spending projections are now lower than previous projections.