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Annual projections from NHE compared to actual health care spending

Katie Koziara
Katie Koziara May 5, 2022

Annual projections from NHE compared to actual health care spending.

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The Centers for Medicare & Medicaid Services (CMS) recently released their National Health Expenditure (NHE) projections of health care spending in the United States through 2030. While these data are helpful when looking at the overall health care system, historically, they overestimate projected spending on retail medicines. Since 2001, CMS actuaries have overestimated the next year’s actual retail medicine spending by $1 billion or more two thirds of the time.

According to the most recent data from CMS, changes in spending on retail medicines are expected to track with overall health care spending. But when we look at past projections, we can see the actual future spending on retail medicines is likely to grow more slowly.

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Aside from overestimating medicine spending, the data do show other trends that can be helpful when we look at future health care spending. CMS reported that hospitals remain a significant driver of health care costs. From 2000 to 2020, the United States spent almost four times as much on hospital care than retail prescription medicines, a trend that is projected to continue through 2030.

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Other key findings:

  • Actuaries attribute growth in retail medicine spending in 2021 to better adherence and increased use of medicines by patients in the Medicaid program.

  • Total spending on health care, as well as spending on hospital, physician and clinical services are all expected to grow at a faster rate than spending on prescription drugs between 2021 and 2030.

  • Patient out-of-pocket spending on health care is estimated to increase through 2024 as the health care system recovers from missed care during the COVID-19 pandemic.

Learn more at phrma.org/cost.

Topics: Drug Cost, Medicare