In 2024, home healthcare produced an average annual growth rate of 8.5%, resulting in a slowdown from the 10.8% increase in 2023.
The slowdown is attributed to a decline in spending growth following the Covid-19 pandemic, according to a new report from the Centers for Medicare and Medicaid Services (CMS) published in Health Issues.
Still, the report's authors predict that national health spending will reach $8.6 trillion by 2033.
From 2024 to 2033, growth in national healthcare spending is expected to outweigh GDP growth, at 5.8% versus 4.3%. By 2033, the share of the healthcare sector's economy will reach 20.3%, with a 2.7% increase from 2023.
“In 2023, insured population reached a record high of 92.5%,” the report read. “The peak in 2023 was primarily due to record-breaking Medicaid registrations, and was affected by the ongoing registration requirements of the 2020 Family First Coronavirus Response Act (FFCRA).”
Personal medical expenses, which increased 9.4% in 2023, are expected to rise significantly in 2024, with an increase of 8.7%. Researchers believe this growth is faster than many insurers have predicted, with a higher medical loss rate for some public companies.
Payers' expenditures
According to the report, Medicare costs rose to 8.3% in 2024, slightly up from 8.1% in 2023, reaching $1.1 trillion from 8.1% in 2023, according to the report. This steady increase has slowed the rise in Medicare Advantage's yield rate, offsetting the fast growth in paying for service fees.
Medicare spending is projected to increase by 7.7% in 2025, with most areas of personal healthcare slowing down. Researchers expect this trend to continue in 2026 and 2027, with a forecast growth rate of 8.9%.
Between 2028 and 2033, Medicare spending is projected to increase by an average of 7.4%, with enrollment rising by 2.2% in 2028 and 2% in 2029.
Medicare enrollment is rising rapidly, but researchers expect Medicaid to continue to decline.
Medicaid spending fell from 7.9% in 2023 to 6.2% in 2024, with total spending reaching $925.6 billion. Registration also fell 7.9% in 2024. This is partly due to the addition of beneficiaries that have been deleted and re-registered.
In 2025, even if Medicaid enrollment declines by 1.2%, the increase in spending is expected to increase to 7.4% due to slower regime declines through 2024.
Between 2028 and 2033, Medicaid spending is projected to grow from 6% to 6.5% per year, with registrations expected to increase modestly, with an average annual average of 0.7%.
Regarding private insurance, the report forecasts a growth rate of 7.6% in 2025. The growth in out-of-pocket spending is expected to slow down from 7.3% in 2024 to 6.4%.
By 2033, private health insurance spending is projected to grow at an average rate of 4.3%, which is likely lower than Medicare and Medicaid growth rates, so enrollment will increase as many individuals move to and move to Medicare.
“While the forecasts presented reflect current laws, future changes to legislative and regulatory health policies could have a significant impact on forecasts of health insurance coverage, health spending trends, and related cost sharing requirements, and therefore could impact GDP health share by 2033,” the report concluded.
