Can Americans tolerate the new normal for health care spending?

U.S. health care spending is projected to grow at about the rate of inflation over the rest of the decade after the pandemic fueled a nearly 10% jump between 2019 and 2020, federal experts said Monday.

CMS actuaries’ projections in Health Affairs came with plenty of caveats. But if trends hold, out-of-pocket spending is going up and up, as is spending on private coverage, Medicare and Medicaid.

National health spending surged 9.7% in 2020, rising from $3.8 trillion in spending in 2019 to $4.1 trillion in spending in 2020.

  • Spending growth is projected to drop to less than half of that, 4.2% in 2021, or about $4.3 trillion.
  • The actuaries project 4.6% spending growth in 2022, or about $4.5 trillion.

Spending is expected to grow an average of 5.1% between 2021 and 2030 when it would reach almost $6.8 trillion. Growth in the Gross Domestic Product is also projected to be 5.1% annually over the same period.

  • That will keep the health share of the economy at just shy of 20%.
  • Spending should be driven by more traditional economic, demographic and health-specific factors after it surged on pandemic-fueled assistance to health providers, public health programs and Medicaid payments.

Costs are also projected to rise.

  • For those on private health insurance plans, per-enrollee spending dropped nearly half a percent in 2020 before rising by a projected 5.5% in 2021. The report projects an 8.3% jump in 2022 and 7.2% increase in 2023.
  • Per enrollee spending on Medicare is projected to jump 9.4% in 2021, 5.1% in 2022 and 3.3% in 2023. Per enrollee spending on Medicaid is projected to increase 2% in 2021, 6.7% in 2022, and 6% in 2023.
  • Out of pocket spending dropped by 3.7% in 2020. Projections show it jumping 4.6% in 2021 and 6.1% in 2022.

Health spending is going up (big surprise!) in traditional categories like hospitals, prescription drugs and doctors and clinical services through 2024 while pandemic-related effects like COVID vaccines, testing and treatment and expanded Medicaid coverage fall off – wrote Tina Reed of Axios Vitals

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