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A recent report from the Centers for Medicare and Medicaid Services (CMS) predicted that national health expenditures will outpace the gross domestic product (GDP) growth from 2022 to 2031. Per person spending is expected to increase at an annual rate of 4.8% during this period, above pre-COVID-19 growth rates. This will contribute to an increase in the health care spending share of the GDP.
Healthcare spending as a percentage of GDP rose from 17.6% to 19.7% in 2020 but decreased to 18.3% and 17.4% in 2021 and 2022, respectively. However, it is expected to grow to 19.6% by 2031. Out-of-pocket spending increased by 10.3% in 2021 and is projected to grow by 3.8% in 2022 and 4.4% in 2023. Prescription drug spending grew by 7.7% from 2020 to 2021 and is expected to slow to 2.8% in 2023. It’s expected to slow as Medicaid enrollments decline and Medicare prescription spending decreases due to generic drugs entering the market and the Inflation Reduction Act reforms become effective.
Employees will continue to look to their employers for assistance. Employers may want to review the benefit plans and look for cost-saving measures but still retain highly desired benefits. Download the bulletin for more details.