US Health Care Expenditures to Reach $7.1 Trillion by 2031; Hospice Spending to Double by 2032

The nation’s total health care spend is expected to swell by 5.4% annually between 2022 and 2031, reaching $7.1 trillion. Meanwhile, Medicare hospice spending is expected to more than double by 2032.

These data from the U.S. Centers for Medicare & Medicaid Services (CMS) Office of the Actuary also project that health care expenditures will represent 19.6% of the nation’s gross domestic product by the end of that time frame, up from slightly more than 18% in 2021. The report, published today in Health Affairs, did not contain hospice-specific data. However, the annual Medicare Trustees Report for 2023 provides a more detailed look at hospice spending.

“For hospice spending, in the National Health Expenditure (NHE) Accounts, this type of spending is spread across different types of service depending on the location where the service was provided,” a CMS spokesperson told Hospice News in an email. “In the NHE accounting, you will find spending on palliative care or hospice care in the hospital, nursing home, and home health care sectors. CMS does not have projections at the level of detail of hospice specific care for all payers for the NHE accounts.”


In 2022, CMS paid $23.9 billion for hospice care, according to the trustee’s report. By 2032, this is projected to increase to more than $54 billion. The estimate is based on anticipated per diem rates, about 3% growth per year, as well as a “residual,” a number that accounts for other factors that affect costs, the report indicated.

Among payers, Medicare will see the highest proportion of the increase at 7.5% by 2031, due to the growing senior population. For comparison, private insurance spending is anticipated to rise by 2.5% and Medicaid by 3.2%. About 10,000 Americans become Medicare-eligible each day, according to the Kaiser Family Foundation.

Nevertheless, the Medicare percentage reflects a slower rate of growth than previously expected.


“A deceleration in spending growth compared to that in 2021 is attributable in part to the Medicare fee-for-service beneficiaries using emergent hospital care at lower rates during 2022,” CMS Economist Jacqueline Fiore said in a conference call. “Also contributing to the slowdown was a phased-in reinstatement of sequestration-based payment rate cuts after a full-year suspension.”

Medicare sequestration was established in 2014 by the Budget Control Act. The practice reduced payments to hospice and other health care providers by 2% across the board. CMS temporarily halted sequestration in response to the COVID-19 public health emergency, but the agency resumed phasing in the reductions during 2022. 

Health care spending via Medicare will once again pick up speed, however, due to projected increases in hospital utilization among fee-for-service beneficiaries as well as rising per-enrollee costs.

“Hospital spending growth is expected to be 5.8% per year on average between [2022 to 2031]. A very unique year-by-year trend — in 2022 hospital spending growth is projected to slow to 0.8% compared to 4.4% in 2021” Fiore said. “Declining growth in use, in part attributable to pandemic-related hospital staffing issues, contributed to projected declines in private health insurance and out-of-pocket hospital spending, as well as growth in Medicare. In 2022 and 2023, hospital spending growth is projected to accelerate substantially to 9.3%.”

A significant factor in the anticipated hospital spending increase is rising labor costs, which have also been afflicting hospices and other providers in the continuum.

The national average hourly rate for hospice aides and CNAs rose 9.09% in 2022, compared to a 4.52% increase in 2021, according to the 2022-2023 Hospice Salary & Benefits Report, published by Hospital & Healthcare Compensation Service (HCS) in cooperation with the National Association for Home Care & Hospice (NAHC).

Nationally, registered nurses saw average salary increases of 5.95% in 2022. Medical directors saw the lowest rate of increase at 0.6%.

“It’s killing me financially, between direct labor costs like retention efforts, raises, and incentive pay in sign-on and retention bonuses,” Kathleen Benton, president and CEO of Hospice Savannah, recently told Hospice News. “Indirectly, it’s anything from human resources ensuring great employee benefits to their input in recruitment. We’re doing all we can to make sure that our people feel very well taken care of, and that requires time and effort.”

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