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Health spending in U.S. will top $10,000 a person in 2016

Written by Diane Archer

Health spending in the U.S. will top $10,000 a person in 2016, according to new projections from the Centers for Medicare and Medicaid Services, CMS.  What’s responsible for this rise: Hospital costs, prescription drug costs and health insurer administrative costs and profits.  CMS estimates the total health care cost per person this year will be $10,346. That’s up from $9,960 in 2015.

Health spending is expected to grow annually 5.8 percent, 1.3 percent faster than the gross domestic product. Health care spending is expected to represent 20.1 percent of the economy by 2025, up from 17.5 percent in 2014. Higher growth in medical prices and the aging of the population are in part responsible. Federal, state and local governments are expected to pay about half the cost.

By 2025, the Medicare population is projected to grow to 20 percent of the total U.S. population. And, 72 million people will have Medicare, up from 55.8 million today.

In the 20 years before the Great Recession, national health care spending grew even faster than since then. That’s in part because patients are paying more of the cost of care than ever before.

CMS projects that spending on prescription drugs will continue to grow 6.7 percent each year through 2025.  That’s down from 8.1 percent in 2015, when we spent $321.9 billion on drugs, and 12.2 percent in 2014. But, it’s still way faster growth than the economy overall. There are new expensive drugs on the market which are driving this spending growth.

CMS projects a growth in people’s out-of-pocket costs through 2018, largely due to an increase in health plans with high deductibles, the amount people must pay out of pocket before coverage kicks in.

Private health insurance expenditures are expected to grow more than 5 percent a year through 2025. In 2014, they totalled $1 trillion.

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