CNC - U.S. healthcare spending to top $7T by 2031
2023-06-18 12:00:35 ET
Annual healthcare expenditure in the U.S. is set to reach $7.2T in 2031, making up about 20% of the total economy, the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS) said in its annual spending report last week.
That is up from $4.4T in 2022, when the U.S. health expenditure accounted for ~17% of the economy, compared to ~18% in 2021 as the economic growth outpaced post-COVID growth in healthcare spending.
However, during 2022 – 2031, the national healthcare expenditure is expected to surpass the economic growth, expanding 5.4% per year on average, despite legislative efforts to contain soaring drug prices.
The Inflation Reduction Act (IRA) passed in 2022, introducing unprecedented changes to Medicare prescription drug pricing, is anticipated to cause a “minor, but noteworthy, influence on Medicare spending trends,” according to CMS.
Medicare, the health program for older and disabled Americans , is expected to record 7.5% average growth in spending over the period, the fastest among all payers, amid a rise in enrollments partly due to the addition of the last set of baby boomers.
Meanwhile, private health insurance and Medicaid spending are estimated to grow annually at 5.4% and 5.0% on average, respectively.
CMS estimates suggest that prescription drug provisions in IRA will lower out-of-pocket spending for Medicare Part D beneficiaries from next year. Still, the legislation is unlikely to bring savings to the healthcare program until at least 2031.
As for health insurance coverage, the share of insured in the population reached a historic high of 92.3% in 2022, driven by gains in Medicaid enrollees and a significant rise in Marketplace enrollments.
The number of Medicaid beneficiaries is expected to reach 81.1M in 2025, down from 90.4M in 2022 with the expiry of COVID-era protections that boosted Medicaid enrollments during the pandemic.
However, the nation’s overall insured rate is projected to remain above 90% until 2031 as those driven out of Medicaid programs with the resumption of eligibility reviews obtain coverage from other sources, such as Marketplace plans and employers.
Leading health insurers: UnitedHealth ( NYSE: UNH ), Humana ( NYSE: HUM ), Alignment Healthcare ( ALHC ), CVS Health ( NYSE: CVS ), Elevance Health ( NYSE: ELV ), Cigna ( CI ) Centene Corporation ( CNC ), Molina Healthcare ( MOH ) and Clover Health Investments ( CLOV )
More on health insurers
- UnitedHealth, Humana in selloff as analysts react to cost concerns
- Medicaid insurers underperform as COVID protections lapse for millions
- UnitedHealth Group: Cost Worries Are Opening For Dividend Hounds
For further details see:
U.S. healthcare spending to top $7T by 2031