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No relief in sight: Americans’ health care spending projected to rise 5.5 percent a year

Prices for medical goods and services are projected to grow as more baby boomers retire and move from private insurance to Medicare.

The independent Office of the Actuary at the Centers for Medicare & Medicaid Services (CMS) predicts the nation’s health spending will grow by an average of 5.5 percent between 2018 and 2027, reaching nearly $6 trillion by 2027.

To put the numbers in context, federal officials estimate the nation’s overall Gross Domestic Product – the market value of all goods and services – will grow by an average of just 0.8 percent during the same period.

Rising health care costs will most certainly affect taxpayers. According to the report, federal, state and local governments are projected to finance 47 percent of national health spending.

Where will the money go?

  • As baby boomers age, they’ll enroll in Medicare and likely use more services covered by the federal program. Medicare spending growth will average 7.4 percent over the next 8 years.
  • Prescription drugs. Spending for prescription drugs will grow by an average of 5.6 percent. Why the jump? Experts cite the development of newer, more expensive treatments and a growing number of people who will rely on prescription medications to manage their chronic health conditions.
  • Hospitals and physician services. As Americans age, more people will require both inpatient and outpatient services, and those services will only get more expensive.

What about you? Are your health care costs growing at a faster rate than your income? Share your story with Voices for Affordable Health.