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The outlook for national health spending calls for continued steady growth. Spending growth is projected to be 6.7 percent in 2007, similar to its rate in 2006. Average annual growth over the projection period is expected to be 6.7 percent. Slower growth in private spending toward the end of the period is expected to be offset by stronger growth in public spending. The health share of gross domestic product (GDP) is expected to increase to 16.3 percent in 2007 and then rise throughout the projection period, reaching 19.5 percent of GDP by 2017.

In 2006, U.S. health care spending increased 6.7 percent to $2.1 trillion, or $7,026 per person. The health care portion of gross domestic product (GDP) was 16.0 percent, slightly higher than in 2005. Prescription drug spending growth accelerated in 2006 to 8.5 percent, partly as a result of Medicare Part D's impact. Most of the other major health care services and public payers experienced slower growth in 2006 than in prior years. The implementation of Medicare Part D caused a major shift in the distribution of payers for prescription drugs, as Medicare played a larger role in drug purchases than it had before.

Growth in national health spending is projected to slow slightly from 6.9 percent in 2005 to 6.8 percent in 2006, marking the fourth consecutive year of a slowing trend. The health share of gross domestic product (GDP) is expected to hold steady in 2006 before resuming its historical upward trend, reaching 19.6 percent of GDP by 2016. Prescription drug spending growth is expected to accelerate to 6.5 percent in 2006. Medicare prescription drug coverage has dramatically changed the distribution of drug spending among payers, but the net effect on aggregate spending is anticipated to be small.

In 2005, U.S. health care spending increased 6.9 percent to almost 2.0 trillion dollars, or 6,697 dollars per person. The health care portion of gross domestic product (GDP) was 16.0 percent, slightly higher than the 15.9 percent share in 2004. This third consecutive year of slower health spending growth was largely driven by prescription drug expenditures. Spending for hospital and physician and clinical services grew at similar rates as they did in 2004.

U.S. health care spending rose 7.9 percent to $1.9 trillion in 2004, or $6,280 per person. Health spending accounted for 16 percent of gross domestic product (GDP), nearly the same as in 2003. The pace of health spending growth has slowed, compared with the 2000-2002 period, for both public and private payers. Hospital spending accounted for 30 percent of the aggregate increase between 2002 and 2004, and prescription drugs accounted for an 11 percent share-smaller than its share of the increase in recent years and much slower in absolute terms.

The pace of health spending growth slowed in 2003 for the first time in seven years, driven in part by a slowdown in public spending growth. U.S. health care spending rose 7.7 percent in 2003, much slower than the 9.3 percent growth in 2002. Financial constraints on the Medicaid program and the expiration of supplemental funding provisions for Medicare services drove the deceleration. U.S. health spending accounted for 15.3 percent of U.S. gross domestic product in 2003, an increase of 0.4 percentage points from 2002.

U.S. health care spending climbed to dollars 1.6 trillion in 2002, or dollars 5,440 per person. Health spending rose 8.5 percent in 2001 and 9.3 percent in 2002, contributing to a spike of 1.6 percentage points in the health share of gross domestic product (GDP) since 2000. Hospital spending accounted for nearly a third of the aggregate increase. During the past three decades, per enrollee spending for a common benefit package has grown at a slightly slower average annual rate for Medicare than for private health insurance, with more pronounced growth differences recently reflecting legislated Medicare reimbursement changes and consumers' calls for more loosely managed care.

U.S. health care spending grew 8.7 percent to $5,035 per capita in 2001. Total public funding continued to accelerate, increasing 9.4 percent and exceeding private funding growth by 1.2 percentage points. This acceleration was due in part to increased Medicaid spending in the midst of a recession and payment increases for Medicare providers. Prompted by sluggish economic growth and by faster-paced health spending, health spending's share of GDP spiked 0.8 percentage points in 2001 to 14.1 percent.