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Scan for outdated or missing drivers - takes under a minuteDriver Scan →Clear out junk files and repair common Windows errorsFree Scan →Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →Why can healthcare spending rise without better outcomes? Because spending measures the money paid for care, while outcomes measure what happened to patients. Spending can increase because prices rise, people use more services, treatment becomes more complex, or the population grows—none of which, by itself, proves that people became healthier. Higher spending alone neither proves nor disproves a health gain.
What healthcare spending measures—and what it does not
In the United States, the Centers for Medicare & Medicaid Services (CMS) tracks national health expenditures by who pays, what services are purchased, and who sponsors the spending. These accounts describe financial activity. They do not, on their own, show whether patients recovered, lived longer, avoided complications, or experienced a better quality of life.
That distinction matters when interpreting a rising total. More spending could accompany better outcomes, worse outcomes, or no detectable change. To assess the relationship, spending data must be paired with clearly defined health outcomes and a comparison that accounts for differences in prices, population, coverage, services, and illness burden.
Why the total can rise
CMS’s projection methodology separates several forces that can affect expenditure growth. They can occur together, and a national total does not reveal which one explains a particular increase unless the components are examined.
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- Higher prices: The same service can cost more. CMS models medical price growth primarily in relation to input-price inflation—the costs of providing care—with a lag as providers set private-payer prices in response to recent input-cost changes. This is a modeling approach, not a claim that every provider or price moves identically.
- More services: Spending can rise when patients receive more visits, procedures, prescriptions, or hospital care.
- Greater intensity or complexity: Real per-capita spending on personal health care is used by CMS as a measure of quantity that reflects both utilization and intensity. CMS says intensity implicitly captures average treatment complexity and the severity of underlying illness.
- Population growth and demographic change: A larger population can raise total spending even if spending per person is unchanged. The age and other demographic composition of the population can also affect projected spending.
- Coverage and payer mix: Changes in coverage, including shifts between private insurance and public programs, affect how spending is distributed and are accounted for in CMS’s modeling.
These factors explain why a larger expenditure total is not a stand-alone measure of care quality or health improvement. For CMS’s definitions and modeling details, see the Office of the Actuary’s NHE methodology and model specification.
What the current U.S. projections say
CMS’s June 24, 2026 projections cover 2025–2034. They forecast average annual national health expenditure growth of 5.4%, compared with projected average annual GDP growth of 4.1%. CMS projects health spending to rise from 18.0% of GDP in 2024 to 20.6% in 2034. The 2024 share is a historical figure in the projection series; the 2034 share and growth rates are forecasts, not observed results.
Projected annual average spending growth differs across major service categories over the same 2025–2034 period:
| Category | Projected average annual spending growth, 2025–2034 |
|---|---|
| Retail prescription drugs | 5.7% |
| Physician and clinical services | 5.5% |
| Hospital care | 5.2% |
CMS also identifies continued high utilization growth across most services and retail prescription-drug spending as major drivers for 2025–2026. These figures describe projected spending patterns; they do not establish whether outcomes will improve. See the CMS NHE Fact Sheet and projection presentation.
A historical example: different services, different drivers
CMS’s account of 2022 illustrates why the cause of spending growth should be specified by year and service rather than generalized. Retail prescription-drug spending grew 8.4%; CMS attributed faster growth in part to more prescriptions dispensed and a 1.2% increase in retail drug prices. Hospital spending grew 2.2%, with slower hospital price growth and declines in hospital days and discharges contributing to the lower increase. These are historical, category-specific observations—not estimates of current trends or evidence about outcomes.
See CMS’s National Health Expenditures 2022 Highlights for the underlying historical summary.
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How to tell whether higher spending produced better outcomes
A spending trend alone cannot answer that question. A meaningful evaluation has to compare spending with outcomes for a defined population, place, and period, while separating changes that could otherwise be mistaken for a care effect.
- Specify the outcome: Choose a measurable result, such as survival, complications, avoidable hospitalizations, or patient-reported health. Different outcomes can tell different stories.
- Define who and where: State the population and geography. A national average can conceal differences among age groups, conditions, or communities.
- Set the time horizon: Some interventions may affect outcomes quickly; others may take years. Compare periods that fit the outcome being assessed.
- Separate total from per-person spending: Total spending can grow as the population grows, even when spending per person does not.
- Account for prices, volume, and intensity: Determine whether the increase reflects higher prices, more services, more complex treatment, or a combination.
- Consider coverage and illness burden: Changes in who is insured, who pays, and how sick the population is can affect both spending and measured outcomes.
Even a spending-and-outcome comparison does not automatically establish causation. A credible conclusion requires a method that addresses other differences over time or between groups; national expenditure accounts alone do not provide that estimate. CMS’s historical NHE materials describe spending trends, not a complete outcome evaluation.
What these figures cannot tell you
The 2025–2034 CMS estimates are projections of expenditure and enrollment, not forecasts of whether Americans will become healthier. Similarly, category growth rates do not show whether spending in a category is effective, wasteful, or associated with a particular outcome. CMS’s research index points to many forces associated with historical spending trends—including policy changes, legislation, recessions, prices, and public and private initiatives—and lists literature on technology’s contribution to spending growth. Those references do not justify a blanket claim that technology always raises costs or always improves outcomes.
For household-finance decisions, rising national health expenditures are useful context, but they cannot predict an individual’s premiums, out-of-pocket costs, or health results. Those depend on factors such as coverage, plan terms, care received, and location; a national spending projection is not a personal cost estimate.
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