National health expenditures to reach $8.6T by 2033: CMS

Actuaries from CMS have updated their projections for national health expenditures from 2024 to 2033, estimating healthcare spending in the U.S. to reach nearly $8.6 trillion in less than a decade.

The U.S. currently spends about $5.6 trillion on healthcare, according to data released in Health Affairs on Wednesday. However, a rapidly aging population requiring more healthcare services will accelerate spending through 2033.

CMS actuaries predict annual growth in national healthcare spending of 5.8% from 2024 to 2033, outpacing the average growth in gross domestic product (GDP) of 4.3%. As a result, healthcare's share of the economy will reach over 20% by 2033, up from 18% in 2024.

Medicare would see the most significant increase in healthcare spending during the period, with a projected annual growth rate of 7.8%. The growth rate would reflect strong average enrollment growth compared to other payers, including Medicaid and private insurance providers. The last group of Baby Boomers is also expected to age into Medicare by 2029, CMS actuaries reported.

Medicaid would still experience substantial growth, with average spending expected to increase by 6.4% annually through 2033. However, CMS actuaries estimate volatility in the program because of upcoming enrollment changes under President Trump's "Big, Beautiful Bill," which contains billions in possible Medicaid cuts.

"Although the projections presented here reflect current law, future legislative and regulatory health policy changes could have a significant impact on the projections of health insurance coverage, health spending trends, and related cost-sharing requirements, and they thus could ultimately affect the health share of GDP by 2033," the report authors wrote.

Without accounting for potential Medicaid changes, the data points to positive growth at an average of 1.2% from 2026 to 2027.

Meanwhile, private health insurance spending is slated to increase in 2025, although at a slower rate than in 2024. Private payers will likely see slower enrollment growth (1% in 2025 compared with 2.5% in 2024) and per-enrollee growth (6.5% in 2025 compared with 7.7% in 2024).

Out-of-pocket spending is expected to experience the slowest rate of growth from 2024 to 2033, at 4.5%.

Additionally, more national health expenditures would go to hospital care, which CMS actuaries project to increase by 5.9% annually through 2033. Physician and clinical services would increase by 5.5% each year, and prescription drugs by 5.6% each year.

Overall, CMS actuaries predict a higher uninsured rate during the period after an all-time high of 92.5% insured rate in 2023. The insured rate is projected to drop -- to 92.1% in 2025 and 91.3% in 2033 -- as COVID-19 pandemic-era flexibilities unwind completely, including provisions from the Inflation Reduction Act (IRA) of 2022.

"For 2026 and later, the growth rates for utilization and spending are generally expected to moderate, while at the same time many notable enrollment changes are expected to occur (including the completion of Medicaid unwinding and the expiration of the IRA's temporarily enhanced premium tax subsidies for Marketplace plans in 2026), leading to a somewhat lower insured share of the population," CMS actuaries wrote.

Jacqueline LaPointe is a graduate of Brandeis University and King's College London. She has been writing about healthcare finance and revenue cycle management since 2016.