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U.S. health spending to outstrip GDP growth

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Staff Writer | July 18, 2016
Health cost
Spending on health   The report covers the years 2015–25

The Centers for Medicare and Medicaid Services (CMS) said that healthcare spending will grow by an average of 5.8% per year up to 2025, which is 1.3 percentage points faster than GDP growth.

The report covers the years 2015–25 and says that health spending will account for 20.1% of the total economy by the end of this period, compared with 17.5% in 2014.

The share of total health expenditure paid for by federal, state and local governments is projected to increase to 47% by 2025, the report added.

While this projected rate of national health spending growth is faster than in the last few years, spending has slowed in comparison to the two decades prior to the financial crisis, which was at its height between 2007 and 2009.

The report suggests this is in part due to increasing cost sharing in private health insurance plans and various Medicare payment update provisions.

The recent 'Obamacare' reforms created ripples in the pool of healthcare spending, with millions of Americans gaining health insurance coverage in 2014 under the terms of the Affordable Care Act (ACA). One in five Americans is expected to be covered by Medicare by 2025.

As the CMS points out, this expanded Medicaid eligibility and made subsidised plans available. As a result, health spending growth rose from 2.9% in 2013 to 5.3% in 2014 and the increase in coverage should carry on influencing health spending growth during the first two years of the 2015–25 period.


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