Growth in national health expenditures (NHE) in the United States is expected to significantly outpace economic growth in 2008 and 2009 due to the recession, according to a report issued by the Centers for Medicare & Medicaid Services (CMS). The report was prepared by CMS's Office of the Actuary and published online by the journal Health Affairs.

In 2008, growth in national health expenditures is expected to be 6.1 percent, as health spending increases from $2.2 trillion in 2007 to $2.4 trillion in 2008, while growth in the economy, as measured by the gross domestic product (GDP) is anticipated to be 3.5 percent. For 2009, health spending is projected to increase 5.5 percent while GDP is expected to decrease 0.2 percent. The health share of GDP is expected to increase from 16.2 percent in 2007 to 16.6 percent in 2008 and to 17.6 percent in 2009. This represents about one-third of the total increase in the health share of GDP for 2008 through 2018.

Over the period 2008-2018, average annual health spending growth (6.2 percent) is anticipated to outpace average annual growth in the overall economy (4.1 percent). By 2018, national health spending is expected to reach $4.4 trillion and comprise just over one-fifth (20.3 percent) of GDP.
Over the projection period, average annual spending growth by public payers (7.2 percent) is expected to outpace that of private payers (5.3 percent). As a result, the public share of total health care spending is expected to rise from 46.2 percent in 2007 to over 50 percent by 2016, and then reach 51.3 percent by 2018.

Private health spending growth, which includes growth in private health insurance spending and out of pocket payments, is projected to decelerate from 5.8 percent in 2007 to 5.3 percent in 2008. It is then projected to reach a 15-year low of 3.9 percent by 2009, driven by expected slower income growth and a decline in the number of people covered by private health insurance.

Related to projected faster growth in Medicaid enrollment and expenditures, public spending growth on health care is projected to accelerate from 6.4 percent in 2007 to 7.0 percent in 2008 and to 7.4 percent by 2009.

Hospital spending growth is expected to edge downward from 7.3 percent in 2007 to 7.2 percent in 2008, and then decelerate further in 2009 to 5.7 percent. Driving the expected deceleration in hospital spending growth is projected slowing growth in use associated with the recession and projected slower income growth. In addition, hospital price growth is expected to decelerate to the slowest rates since 2000 (2.9 percent in 2008 and 2.6 percent in 2009), also associated with the effects of the recession.

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