Workplace Issues

Health-Care Spending to Rise 6% Annually

Health care will be almost 20% of U.S. GDP by 2024, according to a group of government actuaries.
Katie Kuehner-HebertJuly 29, 2015
Health-Care Spending to Rise 6% Annually

Health-care spending will easily outpace the nation’s overall economic growth in the next decade, according to a report by government officials published Tuesday in the journal Health Affairs.

The health share of U.S. gross domestic product is projected to rise from 17.4% in 2013 to 19.6% in 2024, the authors wrote. Health spending growth is projected to average 5.8% for the years 2014 to 2024, reflecting the Affordable Care Act’s coverage expansions, faster economic growth, and population aging.

By 2019, health-care spending will be increasing at roughly 6% a year, compared with an average annual rise of 4% from 2008 through 2013, say the authors.

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“Recent historically low growth rates in the use of medical goods and services, as well as medical prices, are expected to gradually increase,” the authors wrote. “However, in part because of the impact of continued cost-sharing increases that are anticipated among health plans, the acceleration of these growth rates is expected to be modest.”

Even so, the report is “not great news,” economist Douglas Holtz-Eakin, president of the American Action Forum, told the Associated Press.

“The main point is that the bill will continue to grow faster than the economy, which is what pays the bill,” Holtz-Eakin said. “The next president faces the task of reining in the growth of federal entitlement spending.”

“I do think this becomes something of a liability for anybody coming into office, and they need to have a very proactive policy to address it,” Dan Mendelson, CEO of Avalere Health, a market analysis and consulting firm, told the AP. Mendelson served in the Clinton White House as a health policy expert.