Will health care spending as a share of the economy fall? – Healthcare Economist






In the short-run, the answer is likely ‘yes’. As COVID-19 (hopefully) slows and if economic growth remains strong, health care spending will fall as a share of the US economy. At least this is what the Office of the Actuary (OACT) at Centers for Medicare and Medicaid Services (CMS) thinks in their Health Affairs study published last week. They write:

National health spending growth is expected to have decelerated from 9.7 percent in 2020 to 4.2 percent in 2021 as federal supplemental funding was expected to decline substantially relative to 2020. Through 2024 health care use is expected to normalize after the declines observed in 2020, health insurance enrollments are assumed to evolve toward their prepandemic distributions, and the remaining federal supplemental funding is expected to wane. Economic growth is expected to outpace health spending growth for much of this period, leading the projected health share of gross domestic product (GDP) to decline from 19.7 percent in 2020 to just over 18 percent over the course of 2022–24. For 2025–30, factors that typically drive changes in health spending and enrollment, such as economic, demographic, and health-specific factors, are again expected to primarily influence trends in the health sector. By 2030 the health spending share of GDP is projected to reach 19.6 percent.

In short, as COVID wanes health care spending falls as a share of the economy through 2024. By 2030, however, health care spending looks to rebound to be near 1 in every 5 dollars spent in the U.S. economy.

You can read the full article here.





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