In the release of their annual projections for National Health Expenditures (NHE), the federal government's chief health care actuaries see the sector growing to represent one-fifth of the entire economy by 2025 (up from 18 percent in 2016). Understanding this growth and how to moderate it should be front-and-center for newly confirmed Secretary of Health and Human Services Tom Price.
Over the period of 2016-2025, the actuaries expect NHE to grow by an average of 5.6 percent a year, about 1.2 percent faster than the expected growth of the economy over the same time period.
The year 2016 itself actually saw a slight decline in the growth rate. Its 4.8 percent growth was the result of a slowdown relative to the prior two years, when new coverage under the Affordable Care Act (ACA) was phased in and there was a related increase in the usage and intensity of health care services.
However, the actuaries expect the growth rate to pick up over the projection period as the population ages, making more people eligible for Medicare and Medicaid, and as health care prices rise faster than prices in the overall economy. The two pieces of health care spending that will grow the fastest...