The Centers for Medicare & Medicaid Services estimated national health spending grew 8.2% in 2024 and expects a 7.1% increase in 2025, with projections showing continued growth through 2033.
The Centers for Medicare & Medicaid Services released new data on June 25 showing significant growth in U.S. health spending. The agency reported that national health spending increased by 8.2% in 2024, reaching $5.3 trillion and exceeding $5 trillion for the first time. CMS published these findings in Health Affairs, providing projections for future healthcare expenditures. The growth rate was faster than GDP growth (5.3%), resulting in an increase in the health share of the economy from 17.6% to 18.0% in 2024. The agency forecasts health spending will continue growing at 7.1% in 2025, reflecting continued strong growth in the use of health care services and goods. Looking ahead, CMS projects national health spending will average 5.8% annual growth through 2033, while GDP growth will average 4.3%. Medicare spending drives much of this projected growth, with CMS estimating Medicare expenditures will increase by 7.8% annually during this period.
The elevated health spending growth follows 7.5% growth in 2023, which was influenced by expiring pandemic-related funding. The insured share of the population reached an all-time high of 92.5% in 2023, primarily due to record-high Medicaid enrollment from the continuous enrollment requirement in the Families First Coronavirus Response Act of 2020. The peak also resulted from rapid enrollment growth in direct-purchase private health insurance, driven by temporarily extended enhanced premium tax credits and a Medicaid special enrollment period from the Inflation Reduction Act of 2022. Despite the expiration of the Medicaid continuous enrollment requirement in March 2023 and resulting drops in Medicaid enrollment, the insured share only decreased slightly to 92.1% in 2024.
According to the study authors from CMS's Office of the Actuary, Sean P. Keehan, Andrew J. Madison, John A. Poisal, Gigi A. Cuckler, Sheila D. Smith, Andrea M. Sisko, Jacqueline A. Fiore, and Kathryn E. Rennie, "National health expenditures are projected to have grown 8.2 percent in 2024 and to increase 7.1 percent in 2025, reflecting continued strong growth in the use of health care services and goods." The researchers noted that "Each year for the full 2024–33 projection period, national health care expenditure growth (averaging 5.8 percent) is expected to outpace that for the gross domestic product (GDP; averaging 4.3 percent) and to result in a health share of GDP that reaches 20.3 percent by 2033 (up from 17.6 percent in 2023)."
National health expenditures represent the total amount spent on health care in the United States, including spending by government programs (Medicare, Medicaid), private health insurance, and out-of-pocket payments by individuals. The health share of GDP measures how much of the nation's entire economic output is devoted to health care, serving as an indicator of health care's role in the economy. Personal health care spending specifically covers medical services and goods directly consumed by patients, excluding administrative costs and public health activities. The projections use actuarial and econometric modeling methods, with Medicare estimates prepared for the 2025 Medicare Trustees Report and Medicaid projections from CMS's Office of the Actuary.
This CMS projection reveals that healthcare spending will consume an increasingly larger portion of the U.S. economy, rising from 18.0% of GDP in 2024 to 20.3% by 2033. The 8.2% growth rate in 2024 represents the continuation of elevated spending patterns that began rebounding after the COVID-19 pandemic, with utilization of services returning to and exceeding pre-pandemic levels. The sustained growth differential between health spending (5.8% annually) and GDP (4.3% annually) through 2033 means healthcare will crowd out other economic sectors and strain both public and private budgets. For healthcare organizations, the projected Medicare spending growth of 7.8% annually reflects the baby boomer demographic wave aging into the program, creating both revenue opportunities and capacity challenges. The enrollment shifts—Medicaid losing 7+ million enrollees while private insurance gains 5.2 million—signal changing payer mix dynamics that will affect revenue streams and reimbursement patterns across the healthcare system.
Healthcare organizations must prepare for a decade of health spending growth that will outpace economic growth, with healthcare consuming over 20% of GDP by 2033. The demographic shift toward Medicare, combined with continued strong utilization growth, requires strategic planning for changing payer mix dynamics and capacity expansion. Organizations should model various scenarios for the projected enrollment changes, particularly the expiration of enhanced marketplace subsidies in 2026 and Medicare's accelerating growth as baby boomers age into the program.
It could lead to a drop in coverage if affordability becomes a barrier for direct-purchase insurance.
While inflation is a factor, CMS attributes much of the growth to increased utilization of services and goods.
Rising national health spending often translates to higher premiums and cost-sharing for employer-sponsored plans.
They may shift strategies toward Medicare-focused service lines and streamline operations for efficiency.
States could face tighter budgets and tougher decisions as federal matching funds adjust and enrollment shifts.