US health spending projected to hit $8.6T by 2033

Modern Healthcare – Wednesday, June 25, 2025
By Bridget Early

U.S. households, businesses and governments will spend $8.6 trillion on healthcare in 2033, when the sector will comprise just over one-fifth of gross domestic product, according to a federal report issued Wednesday.

The Centers for Medicare and Medicaid Services Office of the Actuary attributes its forecast to factors such as a rapidly aging population and high demand for healthcare. The independent CMS division published its analysis in the journal Health Affairs.

National health expenditures will increase 5.8% a year on average from 2024 to 2033, the actuaries predict. The healthcare spending trend is expected to continue outpacing economic growth, which the office projects will average 4.3% annually over the coming decade.

The Office of the Actuary’s preliminary findings show that health spending increased 8.2% to $5.3 trillion last year. The agency will publish final calculations for 2024 at the end of this year.

Last year, high residual healthcare service use following the height of the COVID-19 pandemic was a significant contributor, as it had been for several years. Spending grew 7.5% in 2023 and 6.4% in 2022, according to the report.

Healthcare accounted for 18% of GDP in 2024, up from 17.6% the year before.

The spending trend is likely to slow next year and the year after to an average of 5.6% as the COVID-19 hangover subsides and the share of the population without health coverage increases.

The uninsured rate was 7.1% in 2024, down from 7.5% the prior year.

Medicaid enrollment spiked during the pandemic, when states agreed to suspend eligibility redeterminations in exchange for additional federal funding. States conducted an unwinding of that continuous coverage policy in 2023 and 2024. About 7 million people lost Medicaid but a large share found alternate coverage, such as health insurance marketplace plans, the CMS office found.

The actuaries expect the uninsured rate to rise, in part because the enhanced premium subsidies that drove record exchange enrollment are set to expire at the end of 2025.

The Office of the Actuary did not factor in the effects of more than $1 trillion in healthcare cuts the Republican-led Congress and President Donald Trump hope to enact or a recent regulation to make signing up for exchange plans and subsidies more difficult.

The House-passed One Big Beautiful Bill Act of 2025 would cause 7.8 million people to become uninsured because of cuts to Medicaid and the health insurance exchanges, according to the nonpartisan Congressional Budget Office. The Senate is eyeing even steeper cuts.

Medicare spending is projected to grow the most sharply among payers through 2033, at an annual rate of 7.8%, as the youngest baby boomers age into the program through 2029, the Office of the Actuary projects.

Medicaid spending is expected to rise an average of 6.4%, although the actuaries caution that these projections are more difficult to predict.

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