US health care costs to hit $8 trillion in 10 years: Report

(NewsNation) — Annual health care spending in the U.S. is projected to reach $7.7 trillion by 2032, according to new federal actuaries projections, marking a $2.9 trillion increase from last year.

Spending is expected to grow 5.6% annually during the 2023-2032 projection period, surpassing the anticipated 4.3% annual inflation rate. By 2032, healthcare will account for nearly 20% of GDP, up from 17.3% in 2022, the actuaries said.

In 2023, spending is estimated to have grown 7.5%, reflecting the “increases in the use of health care” after the COVID-19 public health emergency ended.

These predictions come as health care spending and health insurance enrollment trends are expected to be influenced by provisions enacted in response to the COVID-19 public health emergency from 2023-2032.

For example, Medicaid enrollment is expected to decrease from its peak of 91.2 million in 2023 to 79.4 million in 2025, following the expiration of the continuous enrollment requirement of the Families First Coronavirus Response Act of 2020.

“Among the major payers, Medicare has the highest projected ten-year average spending growth rate, mainly because of enrollment into the program,” the actuaries said.

These projections come as healthcare spending and health insurance enrollment trends are expected to be influenced by legislative provisions enacted in response to the COVID-19 public health emergency from 2023 to 2032.

Additionally, out-of-pocket spending is expected to slow during 2025-2026. Annual growth in patient spending on drugs will drop to 3.7% in 2025. This is due to the Inflation Reduction Act’s “implementation of a $2,000 annual Part D out-of-pocket spending cap and because 2026 is the first year with lower gross prices for negotiated drugs, which in turn serve to lower beneficiaries’ out-of-pocket payments.”

Actuaries project that spending will be reduced by manufacturer discounts for lower-income patients in 2025 and by drug price negotiation and price increase limits tied to inflation.