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National health care spending expected to fall in next 20 years

Article

Deloitte sees health spending as a percentage of GDP to slow due to new technologies, early disease detection, and engaged patients.

National health care spending expected to fall in next 20 years

While the portion of the nation’s gross domestic product (GDP) spent on health care is expected to continue growing, a new report expects that growth to slow over the next 20 years.

According to the report from Deloitte, the 5.3 percent annual rate of increase projected by the Centers for Medicare & Medicaid Services (CMS) Office of the Actuary, which would see an increase from the $3.8 trillion in spending in 2019 to a whopping $11.8 trillion by 2040, is unlikely to endure. The company expects emerging technologies, the ability to cure and prevent disease, as well as the highly engaged patients.

Despite working with pre-pandemic data, Deloitte expects that spending growth will decelerate and three realities will take shape between now and 2040:

  • Health spending will rise to $8.3 trillion and the $3.5 trillion difference between Deloitte and CMS’ model can be seen as a return on investment for medical advancements.
  • Health spending will shift from the about 80 percent spent in 2019 on care and treatment to the expected 60 percent in spending on improving health and well-being in 2040.
  • A new health care economy based on novel business models will drive 85 percent of revenues. The company expects major changes including the end of general hospitals as currently known, the slowdown of mass-produced biopharma, major changes in the way care is financed.

“While Deloitte’s projection runs counter to historic trends, we believe the U.S. health care system has already entered the first stage of the Future of Health—a dramatic transformation that we expect will take place over the next 20 years,” the report says. “This future will likely be driven by new business models, scientific and technological breakthroughs, consumers armed with highly personalized data, and regulations that encourage change. We see this as an unstoppable transformation, meaning that it will happen regardless of policy or the actions of individual stakeholders.”

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