Why can healthcare spending rise without better outcomes? Because spending counts money paid for care, while outcomes measure what happened to patients. Higher spending may reflect higher prices, more services, more complex treatment, population growth, or shifts in coverage—not necessarily better health. Spending growth alone cannot show whether care improved, worsened, or stayed the same.
The available figures below describe the United States. CMS spending projections are not forecasts of health outcomes, and they should not be read as evidence that population health will improve or decline.
What rising healthcare spending does—and does not—tell you
National health expenditure (NHE) accounts track spending by funding source, service type, and sponsor. They describe financial inputs and services purchased; they do not, by themselves, measure whether patients lived longer, recovered faster, avoided complications, or experienced better quality of life.
CMS projects average annual U.S. health expenditure growth of 5.4% and GDP growth of 4.1% over 2025–2034. It projects health spending to increase from 18.0% of GDP in 2024 to 20.6% in 2034. These are projections, not observed results or estimates of health gains. CMS NHE Fact Sheet, June 24, 2026.
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A spending increase is therefore neither proof of better outcomes nor proof that outcomes failed to improve. To answer that question, spending data must be paired with defined health outcomes and a comparison that accounts for what changed in the population and the care delivered.
Why spending can rise
CMS separates several forces in its projection methodology. The distinctions matter because the same spending increase can arise from very different changes in care and need.
- Prices: Providers may charge more, and the costs of labor, supplies, and other inputs can rise. CMS models medical price inflation mainly in relation to input-price inflation, with a lag as providers set private-payer prices. This is a modeled relationship, not a claim that every provider’s prices move identically.
- Service volume: Patients may receive more visits, procedures, prescriptions, or hospital services.
- Intensity and complexity: Spending can rise when treatment per patient becomes more resource-intensive. CMS uses real per-capita private personal health-care spending as a quantity measure that includes both utilization and intensity. Its methodology describes intensity as capturing average treatment complexity as well as the severity of underlying illness.
- Population and demographics: A larger population can raise total spending even if spending per person does not change. An older population or changes in the population’s health needs can also affect demand and costs.
- Coverage and payer mix: Shifts between private insurance and public programs can change who pays and how spending is recorded, as well as the services used.
- Economic and policy conditions: CMS’s historical research index identifies prices, policy changes, legislation, recessions, and public and private initiatives among forces associated with spending trends. Technology is also discussed in the literature CMS indexes, but its presence does not establish that technology invariably increases costs or improves outcomes.
CMS’s methodology explains that its real per-capita measure of quantity includes utilization and intensity; it should not be mistaken for a direct measure of health benefit. CMS Office of the Actuary, NHE projections methodology, updated June 24, 2026.
What CMS expects to drive spending in the near term
In its June 24, 2026 presentation, CMS identifies continued high utilization growth across most services and retail prescription-drug spending as major drivers for 2025–2026. Over the longer 2025–2034 projection period, average annual growth differs by category:
| Spending category | Projected average annual growth, 2025–2034 |
|---|---|
| Retail prescription drugs | 5.7% |
| Physician and clinical services | 5.5% |
| Hospital care | 5.2% |
These are CMS projections for U.S. spending, not measurements of how outcomes in those categories will change. CMS Office of the Actuary presentation, June 24, 2026.
Why the category and year matter
Spending trends can differ substantially across services and years. For example, CMS reported that U.S. retail prescription-drug spending grew 8.4% in 2022, with more prescriptions dispensed and a 1.2% increase in retail drug prices contributing to faster growth. Hospital spending grew 2.2% that year; slower hospital price growth and declines in hospital days and discharges contributed to the lower increase. These are historical, category-specific figures, not current trend estimates. CMS, National Health Expenditures 2022 Highlights, 2023.
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The example shows why an aggregate growth rate needs explanation: prices and quantities can move differently, and different services can follow different paths. It does not establish whether outcomes improved in either category.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How to tell whether more spending produced better outcomes
A useful comparison needs to align spending with a specific outcome, population, geography, and time period. It should distinguish total from per-person spending and account for price changes, service volume and intensity, population growth, coverage and payer mix, service category, and changes in illness burden. Without those distinctions, a spending increase may reflect a more expensive system, more care, more people needing care, or some combination.
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The CMS expenditure sources cited here establish spending levels, trends, and projections; they do not provide an outcome-specific dataset or causal estimate that determines whether higher spending produced better health. No conclusion about improving, worsening, or unchanged outcomes follows from these figures alone.
Quick Recap
How to read healthcare spending claims
- Check whether a figure is observed historical spending or a projection, and note the years it covers.
- Ask whether it describes total spending or per-capita spending.
- Look for a breakdown of prices, volume, and treatment intensity, rather than treating spending growth as a single cause.
- Identify the service category and payer or coverage group; national totals can hide different trends.
- Look for a clearly named health outcome measured in the same population and over a relevant time horizon.
- Do not treat a correlation between spending and an outcome as proof that one caused the other without a method that addresses other changes.
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