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The Centers for Medicare & Medicaid Services Office of the Actuary has released national healthcare spending that shows that increased utilization and intensity of services and goods increased spending by more than 7% each year over a two-year period.
Healthcare spending increased 7.2% in 2024, which compares to similar growth of 7.4% in 2023, the report said.
There was increased demand for hospital care, physician and clinical services, and retail prescription drugs.
This also put pressure on insurers, which have been reporting high utilization trends in their earnings reports for more than a year. The increased use of services was more than insurers anticipated, the report said.
Healthcare spending growth continued to outpace overall economic growth in 2024, and as a result, the healthcare share of the economy increased from 17.7% in 2023 to 18% in 2024.
CMS on Wednesday released the report that is being published in Health Affairs.
WHY THIS MATTERS
The report made a correlation between increased spending by the nation’s largest insurer, the federal government. The increase in 2024 was driven by rapid growth in ACA tax credits that grew 25.5% in 2023 and 34.9 % in 2024. There was also strong growth in Medicare expenditures, which was associated with provisions of the Inflation Reduction Act that shifted more spend to the federal government, the report said.
Medicaid spending also increased by 3.6% in 2023 but dropped significantly in 2024 after enrollment dropped.
The insured share of the population remained relatively high in 2024, at 91.8%, after its peak of 92.5% in 2023, the report said.
Federal government–sponsored healthcare spending increased 5.5% in 2024, accelerating from growth of 3.8% in 2023.
Private health insurance increased 8.8% in 2024, after growth of 11.2% in 2023.
THE LARGER TREND
Healthcare spending growth was driven by nonprice factors, the report said. Growth in medical prices accounted for 2.5 percentage points in 2024, compared to federal spending of 6.1%.
Personal healthcare spending grew 8.9% per year during each of the consecutive years. This is the highest since 1991 and 1992, when growth for personal healthcare was 9.1%.
ON THE RECORD
“The future of health care spending remains uncertain,” the report said. “Although some of the recent factors affecting utilization and insurance coverage might not persist, health spending trends are certain to be affected by future economic and demographic changes, as well as by new technologies and innovations. For example, developments in artificial intelligence and cancer treatment, as well as expanding policies and use around weight loss treatments and other healthy behavior initiatives, may affect the health care system in unexpected ways.”
Email the writer: SMorse@himss.org