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Projected Wage Inflation vs Medicare Reimbursement Growth

Economic pressures are unsustainable

Health spending is growing significantly faster than the overall economy, creating an unsustainable trajectory

US health expenditure as a precentage of GDP, 2024-2033

2024–2033 CAGR
US health expenditures 5.8%
US GDP 1.8%

Wage inflation vs. Medicare reimbursement

Wages are expected to increase faster than Medicare reimbursement, creating a widening gap

Projected wage inflation vs. Medicare payment growth, 2025-2033

This graph shows the status quo screnario; given the widening labor shortages, the actual gap is likely worse

Structural cost inflation without pricing power makes labor praductivity the primary lever available to providers

1. Using proxy from inpatient Prospective Payment Systems update for 2020-2025 growth. Sources: American Medical Association; CMS.gov; US Bureau of Labor Statistics, Employment Cost Index; BCG analysis.

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