The Situation Report | June 20, 2023
The U.S. Centers for Medicare & Medicaid Services’ (CMS) Office of the Actuary released projections of National Health Expenditures (NHE) and health insurance enrollment for the years 2022-2031.
CMS projects that over 2022-2031, average annual growth in NHE (5.4%) will outpace average annual growth in gross domestic product (GDP) (4.6%), resulting in an increase in the health spending share of GDP from 18.3% in 2021 to 19.6% in 2031.
Medicare: Average annual expenditure growth of 7.5% is projected for Medicare over 2022-2031. In 2022, the combination of fee-for-service beneficiaries utilizing emergent hospital care at lower rates and the reinstatement of payment rate cuts associated with the Medicare Sequester Relief Act of 2022 resulted in slower Medicare spending growth of 4.8% (down from 8.4% in 2021). Medicare spending growth is projected to accelerate to 8.0 percent, with expenditures projected to exceed $1.0 trillion in 2023.
In 2025, Medicare spending is projected to grow 8.9%, reflecting the effect of the Inflation Reduction Act’s (IRA’s) cap ($2,000 in 2025) on out-of-pocket spending for Part D enrollees and the associated shift in responsibility for those payments that exceed the cap from the beneficiaries to the program. Projected Medicare spending growth slows to 6.8% in 2030 and 2031, associated with the IRA’s provisions related to drug price negotiations and inflation rebates, as well as slower enrollment growth as the last of the demographic cohort known as the baby boomer generation (those born between 1946-1964) enrolls in 2029.
Average annual growth in Medicare home health is expected to be 7.5 percent in 2023 and 5.5 percent in 2024.
Medicaid: Medicaid spending is projected to have grown 9.6 percent in 2022, up from 9.2 percent in 2021. On average, over 2022-2031, Medicaid expenditures are projected to grow by 5.0%. With the end of the continuous enrollment condition in 2023, Medicaid enrollment is projected to decline over 2023-2025, with most of the net loss in enrollment (8 million) occurring in 2024 as states resume annual Medicaid redeterminations. Medicaid enrollment is expected to increase and average less than 1% through 2031, with average expenditure growth of 5.6% over 2025-2031.
The Office of the Actuary’s 2022-2031 projections will be published here.
A Health Affairs journal article from CMS’ Office of the Actuary is available here. To view the Health Affairs’ study on these projections, please visit.