National health insurance expenditures projected to grow
June 21, 2024
Source: Fiore, et al Health Affairs June 12, 2024 LINK
The Office of the Actuary of the Centers for Medicare and Medicaid Services (CMS) published its projections of medical costs through 2023 in Health Affairs earlier this month. They estimate that medical costs will rise to $7.7 trillion by 2023, 19.7% of gross domestic product. This increase is driven by the expectation that medical inflation will continue to outpace overall inflation and economic growth. Some of this increase is due to our aging population, but more is due to faster growth in health care prices.
The Office of the Actuary estimated that the annual cost per member for private health insurance would increase from $6,838 in 2023 to $10,576 in2032. Private health insurance is mostly people on employer-sponsored health insurance, although the category also includes individual health insurance purchased on the marketplaces. The researchers projected that employer sponsored health insurance would gain 2.5 million beneficiaries when the marketplace subsidies from the Inflation Reduction Act expire in 2026, although retirement of the youngest baby boomers means that 4.3 million fewer people will be on employer sponsored health insurance in 2032 compared to 2024.
Source: Fiore, et al Health Affairs June 12, 2024 LINK
Implications for employers:
The challenge of making health care affordable for employees and for the business is likely to increase over the coming years as health care inflation is projected to outpace general inflation.
The decrease in those covered by employer-sponsored health insurance in the coming years is due to demographic changes likely to cause labor shortages in many industries, which could lead to higher wages and pressure for more generous benefits.
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