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Home health Spending Expected to Grow by 7.1%

    According to newly published data from the Centers for Medicare & Medicaid Services’ Office of the Actuary, national spending on home healthcare is expected to grow faster than any other health sector in the coming years. In 2022 alone, home health spending increased by approximately 6%, according to a previous CMS report.

    Growth in Home Health Spending

    The new data published in HealthAffairs revealed that between 2025 and 2026, national spending on home health care is projected to increase by 7.1%. This growth rate surpasses other healthcare categories such as hospital care services (4.9%), physician and clinical services (4.8%), and nursing home care (4.8%). The trend is expected to continue with home health care growing by 8.1% between 2027 and 2032, compared to 5.6% for hospital spending, 5.5% for physician and clinical services, and 6% for nursing home care during the same period.

    Home Health vs. Other Sectors

    Compared to other health sectors, home healthcare remains a relatively small spending category despite its rapid growth. In 2026, CMS projects approximately $177.5 billion will be allocated to home healthcare, whereas hospital care is expected to receive $1.7 trillion, physician services $1.1 trillion, and nursing home care $237.6 billion. Looking ahead to 2032, home healthcare spending is forecasted to rise to $282.7 billion, while hospitals and nursing homes could see expenditures of $2.3 trillion and $337.4 billion, respectively.

    CMS’ health spending projections were based on historical Medicare, Medicaid, and private health insurance expenditures, as well as legislative provisions enacted during the COVID-19 public health emergency, according to the HealthAffairs analysis.

    Meanwhile, Medicare spending, driven by projected enrollment growth among baby boomers, is expected to grow the fastest among payers, averaging 7.4% between 2023 and 2032, as noted by HealthAffairs.

    In 2023, overall healthcare spending grew by 7.5% according to CMS projections, outpacing the 6.1% growth in nominal gross domestic product (GDP). Healthcare spending accounted for approximately 17.6% of the United States’ GDP. By 2032, healthcare spending’s share of the economy is projected to increase to 19.7%.

    This data highlights the robust growth potential of the home healthcare sector, despite past and upcoming payment rate cuts. Home health agencies can capitalize on this opportunity by focusing on maintaining staffing efficiency, leveraging support solutions and partnerships, and ensuring high-quality patient care. By strategically navigating these areas, agencies can expand their business and thrive in the rapidly growing home health market.