Overview: The $9 Trillion Projection
US healthcare spending will reach $9 trillion by 2034, equal to 20.6% of the entire US economy. The Centers for Medicare & Medicaid Services (CMS) Office of the Actuary released these annual projections on June 24, 2026. According to the report, total national health spending in 2024 stood at $5.3 trillion — roughly 18% of GDP.
These numbers signal a critical inflection point for the US health system. Spending is growing faster than the broader economy. Payers, providers, and policymakers must all prepare for a decade of sustained financial pressure.
What Is Driving Healthcare Spending Growth?
Several forces are pushing healthcare costs higher. CMS actuaries point to two primary near-term factors: elevated utilization of medical services and goods, and major legislative changes reshaping public coverage programs.
Utilization growth is expected to remain elevated through 2026 before it begins to taper. Meanwhile, broad changes to Medicaid will play a significant role in shaping spending patterns through 2028.
Prescription Drugs: The Fastest-Growing Cost Category
Among all major spending categories, retail prescription drugs rank as the fastest-growing segment over the entire projection period. Jacqueline Fiore, an economist with the CMS Office of the Actuary and a lead author of the report, confirmed this during a media briefing.
“For the major spending categories, retail prescription drugs is the fastest growing major spending category over the projection period,” Fiore stated.
Drug cost growth reflects both volume and price. Demand for high-cost medications is rising across both Medicare and commercial health plans. That dual-channel pressure is making pharmaceutical spending a top concern for health plan executives and payers alike.
GLP-1s and Oncology Drugs Lead Spending
Two drug categories stand out as major cost drivers. First, GLP-1 receptor agonists — commonly used to treat type 2 diabetes and obesity — are seeing surging demand among Medicare beneficiaries. Second, expensive oncology therapies are pushing cancer treatment costs sharply higher.
Together, these two categories illustrate a broader shift: new, high-cost specialty drugs are no longer the exception. They are becoming the norm. Health plans that fail to build effective utilization management and formulary strategies risk serious financial exposure.
Year-by-Year Spending Trajectory
The CMS report tracks spending from 2024 through 2034. Here is a summary of the key data points:
| Year/Period | Estimated Spending | Growth Rate | Share of GDP |
|---|---|---|---|
| 2024 | $5.3 trillion | 7.2% | 18.0% |
| 2025 | $5.7 trillion | 7.3% | 18.4% |
| 2027–2028 | — | ~4.9% | — |
| 2029–2034 | — | ~5.2% avg | — |
| 2034 | $9.0 trillion | — | 20.6% |
The 2025 figure marks the third consecutive year of growth exceeding 7%. That sustained pace is significantly outrunning GDP growth, which CMS projects at 5% for 2025. As a result, healthcare is consuming an ever-larger share of the national economy.
Growth is expected to slow to approximately 4.9% in the 2027–2028 window. Two factors explain this deceleration: utilization rates begin to stabilize, and Medicaid enrollment contracts due to legislative changes. However, that slowdown is temporary.
Legislative Impact: Medicaid and the One Big Beautiful Bill Act
Federal legislation will reshape the spending landscape significantly through 2028. The One Big Beautiful Bill Act — which includes a broad overhaul of Medicaid — directly affects enrollment levels and per-enrollee costs. CMS actuaries expect Medicaid changes to contribute to slower spending growth in the 2027–2028 period, partly due to declining Medicaid enrollment.
This is not simply a budget line item. Reduced Medicaid enrollment affects access to care for low-income populations. It also shifts costs to other parts of the system, including hospitals, community health centers, and commercial payers who absorb uncompensated care. Payers and health plan executives should track these legislative shifts closely, as they will directly affect risk pools and premium pricing.
Medicare Enrollment and Long-Term Spending
After the 2027–2028 slowdown, spending growth will accelerate again. CMS actuaries project that Medicare enrollment growth will be the dominant driver in the second half of the decade. Average annual growth is expected to reach 5.2% between 2029 and 2034.
The underlying cause is demographic: the large Baby Boomer cohort continues to age into Medicare eligibility. More beneficiaries mean more covered services, more prescription drug costs, and more aggregate spending. This enrollment trend is structural and largely unavoidable without significant policy intervention.
For health plans competing in the Medicare Advantage market, this represents both an opportunity and a cost management challenge.
Rising Uninsured Rate by 2034
One notable finding from the CMS report concerns coverage levels. Despite overall spending growth, the share of Americans with health insurance is projected to decline. CMS actuaries estimate that 90.5% of the population will be insured by 2034, down from 91.8% in 2024.
Legislative provisions — primarily the Medicaid overhaul — are the key reason. Fewer people enrolled in Medicaid means a higher uninsured rate. Fiore was direct on this point during the briefing: “These legislative provisions play a key role in reducing the insured share of the population.”
This coverage erosion has practical consequences. Uninsured individuals delay care, often resulting in more costly interventions later. Emergency departments absorb higher volumes of uncompensated care. Hospitals and health systems in safety-net markets face growing financial strain as a result.
Key Takeaways for Health Plans and Payers
The CMS projections carry specific implications for the health plan sector:
- Pharmacy costs demand urgent attention. Retail prescription drugs are the fastest-growing spending category. Plans need robust pharmacy benefit management and specialty drug utilization controls.
- GLP-1 coverage policy will be a competitive differentiator. Plans that design sustainable GLP-1 benefit structures early will have a cost and enrollment advantage.
- Medicare Advantage growth will intensify. Rising Medicare enrollment through 2034 makes MA market strategy increasingly important.
- Medicaid policy risk is real. Legislative changes to Medicaid will compress enrollment and shift care costs. Plans with Medicaid exposure must model multiple legislative scenarios.
- Uninsured rate growth affects the risk pool. A declining insured share means a sicker, higher-cost covered population on average.
The $9 trillion projection is not simply a large number. It is a structural signal. Every segment of the US health system — from payers and providers to pharmacy benefit managers and life sciences companies — will feel the effects of this decade-long spending surge.
