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National health projections through 2008.

S Smith¹, S K Heffler, S Calfo

¹Office of the Actuary, Health Care Financing Administration, Baltimore, MD 21244-1850, USA. ssmith2@hcfa.gov

Health Care Financing Review

|August 3, 2001

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US health spending will increase as a share of gross domestic product (GDP), doubling to $2.2 trillion by 2008. Private health spending is projected to accelerate, while Medicare spending growth is expected to slow due to the Balanced Budget Act of 1997.

Area of Science:

Health Economics
Public Health Policy

Background:

US health spending experienced near stability as a share of GDP for six years (1997-2003).
Projected trends indicate a significant increase in health expenditures relative to economic output.

Purpose of the Study:

To project future trends in US health spending as a share of GDP.
To analyze shifts in public versus private healthcare expenditure growth patterns.

Main Methods:

Analysis of historical health spending data (1997-2003).
Projection modeling for health spending up to 2008.
Evaluation of the impact of the Balanced Budget Act of 1997 on Medicare spending.

Main Results:

Health spending is projected to rise from 13.5% of GDP in 1997 to 16.2% by 2008.

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Total US health spending is expected to double from $1.1 trillion in 1997 to $2.2 trillion by 2008.

A reversal in growth patterns is anticipated, with accelerated private spending and slowed Medicare spending.

Conclusions:

US healthcare spending is set to increase significantly as a proportion of the national economy.
Policy interventions, such as the Balanced Budget Act, are expected to reshape healthcare spending dynamics.
Anticipated acceleration in private health spending may offset slowed public sector growth.