The health care sector by 2033 will comprise more than 20% of the United States’ Gross Domestic Product, up from 17.6% in 2023.

The nation’s total health expenditures are projected to reach $8.6 trillion in 2033, according to a report from the U.S. Centers for Medicare & Medicaid Services (CMS) that was published in Health Affairs on Wednesday.

Increased hospice utilization could help relieve part of the nation’s financial burden for health care, research has shown. Hospice care saves Medicare roughly $3.5 billion for patients in their last year of life, according to a joint report from the National Hospice and Palliative Care Organization (NHPCO), the National Association for Home Care & Hospice (NAHC) and NORC at the University of Chicago. NHPCO and NAHC have since merged into the National Alliance for Care at Home.

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However, current trends indicate growth.

“We are projecting that, on average, national health expenditures are expected to grow at 5.8% which is about 1.5 percentage points faster than overall economic growth at 4.3%,” CMS Economist Sean Keehan said in a virtual press briefing. “If this were to happen, this would lead to a health share of GDP, your health share of the economy, growing to 20.3% by the end of the projection period, 2033, and this would be up from 17.6% in 2023.”

The report’s authors, including Keehan, work in the National Health Statistics group in the Office of the Actuary at CMS.

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The biggest increases are expected to occur within Medicare, which is anticipated to grow at a rate of 7.8% annually, the report indicated. This would be due to strong average enrollment growth relative to Medicaid and private health insurance. The youngest of the baby boomers will age into Medicare by 2029, according to the report.

Medicaid annual spending trends will likely be more “volatile,” the report said. Current legislation before Congress, President Trump’s “Big, Beautiful Bill,” contains billions in potential Medicaid cuts.

Yearly Medicaid spending is expected to rise an average 6.4% between 2024 and 2033, which is close to the same as the growth rate from 2000 to 2019.

Private health insurance will likely see spending rise by an average 5.2%. Among the major payers, out-of-pocket spending is expected to grow at the slowest rate during 2024 and 2033, at 4.5%.

“Despite the expiration of the Medicaid continuous enrollment requirement in March 2023, the associated resumption of states redetermining eligibility for their respective programs, and the resulting drop in Medicaid enrollment, the insured share of the population is projected to have decreased slightly to 92.1 percent in 2024,” the report authors wrote.