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Exhibit 3

National health expenditures (NHE) amounts and annual growth, by source of funds, selected calendar years 2021 – 32

Projected

Source of funds

2021

2022

2023

2024

2026

2032

Expenditure (billions) NHE

$4,289.1 4,081.6

$4,464.6 4,246.8

$4,799.3 4,565.2

$5,048.8 4,802.7

$5,560.3 5,288.3

$7,705.0 7,347.6

Health consumption expenditures

Out of pocket Health insurance

442.2

471.4

508.6

542.4

583.5

748.8

3,011.8 1,218.3

3,211.5 1,289.8

3,498.2 1,433.5 1,023.9

3,669.7 1,550.3 1,086.0

4,069.7 1,671.3 1,246.1

5,790.3 2,216.8 1,936.9 1,334.7

Private health insurance

Medicare Medicaid

892.1 735.4 514.0 221.4 166.0 417.1 210.6 207.5

944.3 805.7 569.7 236.1 171.6 355.5 208.4 217.8

851.9 570.9 281.0 189.0 394.1 164.3 234.1

833.5 532.6 300.9 199.9 425.3 165.2 246.1

930.4 589.4 341.0 221.9 468.0 167.1 271.9

Federal

836.8 497.8 302.0 610.5 198.1 357.4

State and local

Other health insurance programs a Other third-party payers and programs

Public health activity

Investment

Average annual growth

2021 b

2022

2023

2024

2025 – 26

2027 – 32

NHE

6.9%

4.1%

7.5%

5.2%

4.9%

5.6%

Health consumption expenditures

7.0 4.8 5.3 2.7 5.4 9.3

4.0 6.6 6.6 5.9 5.9 9.6

7.5 7.9 8.9 8.4 5.7 0.2

5.2 6.7 4.9 8.1 6.1 7.1 5.8 7.9 0.5 5.1

4.9 3.7 5.3 3.8 7.1 5.7 5.2 6.5 5.3 4.9 0.6 5.1

5.6 4.2 6.1 4.8 7.6 6.2 6.0 6.5 5.3 4.5 2.9 4.7

Out of pocket Health insurance

Private health insurance

11.1

Medicare Medicaid

− 2.2 − 6.7

Federal

15.1 − 1.3

10.8

State and local

6.6 3.4

19.0 10.1 10.9

Other health insurance programs a Other third-party payers and programs

7.0

− 14.8

11.8 39.4

− 1.0

− 21.2

Public health activity

Investment

3.4

5.0

7.5

SOURCE Centers for Medicare and Medicaid Services (CMS), Office of the Actuary, National Health Statistics Group. NOTES Definitions, sources, and methods for NHE categories can be found in CMS. National Health Expenditure Accounts: methodology paper (see the exhibit 1 notes). Numbers might not add to totals because of rounding. Percent changes are calculated from unrounded data. Tables with data for all years of the projection period can be found in CMS.gov. NHE projections tables (see note 1 in text). a Includes health-related spending for Children ’ s Health Insurance Program, Titles XIX and XXI; Department of Defense; and Department of Veterans Affairs. b Reflects annual growth for 2019 – 21 to average the volatile impacts of the first two years of the COVID-19 pandemic.

jected drop of 7.3 million in 2026 as the IRA ’ s temporarily extended enhanced Marketplace subsidies expire. 1 In comparison, employer sponsored insurance enrollment is projected to increase by 2.7 million during 2023 – 25,with continued growth of 2.5 million in 2026. 1 Forthe Medicaid program, spending is projected to de cline in 2024 because of an 11.2 percent decrease in the number of people covered, followed by a rebound in spending growth over the course of 2025 – 26 as enrollment growth rates stabilize (exhibit 2). The ten-year out-of-pocket spending growth rate of 4.7 percent is projected to culmi nate in a 9.7 percent out-of-pocket spending share of total health spending by 2032, down from 10.6 percent in 2023 (calculable from ex hibit 3). Out-of-pocket spending on prescription drugs contributes to this trend because of ex pected slow growth in 2024 and 2025 as the IRA ’ s Part D cost-sharing reduction provisions shift spending away from the beneficiary and

more toward the Medicare program. For three of the major services and goods (hos pital, physician and clinical services, and pre scription drugs), similar rates of growth are ex pected to result in relatively stable shares of spending during the ten-year period (calculable from exhibit 4). From a sponsor perspective, and largely driven by the expiration of the Medicaid continuous enrollment requirement in 2023, the govern ment ’ s share (including federal and state and local) of health spending is projected to continue to fall over the course of 2023 – 24 to 46 percent (exhibit 5) (from a peak of 51 percent in 2020). 1 Thereafter, the government ’ s share of spending is generally expected to increase, reaching 49 percent in 2032.

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July 2024 43:7 Health Affairs

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