More demand does not always indicate more opportunities, not for the US healthcare market for now. The U.S healthcare is simultaneously expanding and straining. How is this possible? Here’s what this article is about.
Utilization is up
Costs keep rising faster than the overall economy, changing coverage rules, tighter payment dynamics and the population is aging into higher-intensity care needs. Those forces ripple outward – payers are recalibrating benefit design and risk while providers wrestle with labor, reimbursement, and cash-flow volatility.
Aging nation
The Congressional Budget Office’s analysis projects Medicare enrollment rising from 60 million in 2023 to 74 million in 2034. Meanwhile, Medicare Advantage(MA) is now a majority pathway: national spending data show Medicare Advantage enrollment reaching 33.4 million beneficiaries in 2024, about 50% of all Medicare enrollees.
A growth rate of above 7% growth for three consecutive years is driven largely by higher use and intensity of services, not just prices. (Hartman et al., Health Affairs, 2026)
The Medicare and Medicare Advantage do have low premiums and provides budget certainty. However, higher copays for services can lead to higher total costs if care is frequent. Consequently, healthcare spending is growing faster than the economy.
Payer constriction and provider woes
A 2025 Journal American Medicine Association (JAMA) Network Open study noted that Medicare Advantage (MA) enrollment rose from 13% of Medicare beneficiaries in 2005 to 54% in 2025.
That matters because MA plans have stronger incentives to steer utilization, manage post-acute care aggressively, and push administrative controls such as prior authorization and claims review.
Medicare physician payment updates, and Inflation Reduction Act drug pricing rules are shaping both payer economics and provider reimbursement expectations. A 2025 Health Affairs article examining claims from plans covering about 30% of the MA market found that 17% of initial MA claim submissions were denied. Although many of these were later reversed, the provider payouts still dip.
Separately, a JAMA Health Forum article on the 2024 CMS prior authorization rule reported that prior authorization requirements have been estimated to cost physicians as much as $26.7 billion annually. This explains why financial strain in healthcare also includes friction, delay and rework.
Bridging the gap
Health care businesses are operating in a market where demand is rising, but revenue visibility is often not. The goal isn’t to “solve” the system in one article, but to connect macro trends to the day-to-day decisions healthcare businesses have to make (pricing, staffing, contracting, billing, and capital planning) and show how better financial visibility can support adaptation.
For providers, that can mean linking the general ledger to denial management, payroll, and entity-level reporting so leadership can see which payer relationships profitable and which service lines are being squeezed by labor or utilization controls.
For payer-facing organizations and care platforms, it can mean better forecasting of collections, clearer unit economics, and faster responses to policy changes such as new prior authorization rules taking effect in 2026 and 2027.
Accounting software won’t fix the system, but it can help healthcare operators respond faster, understand profitability with more precision, and keep the organization stable enough to keep serving patients. All this can be done easier with Sage Intacct. Find out more about how our accounting software can help your healthcare system achieve better financial infrastructure.
In summary
- Cost of managing healthcare services is rising.
- America is transitioning into a bigger portion of aged population which also means higher use of healthcare services.
- Due to the hike in providing healthcare, providers are facing an influx of reimbursement problems as payers are more stringent with claims review.
- Financial visibility is pertinent and clearer for healthcare businesses with the adoption of accounting software.
References
- Hartman M, Martin AB, Lassman D, Catlin A. National Health Care Spending Increased 7.2 Percent In 2024 As Utilization Remained Elevated. Health Affairs. Published Jan 14, 2026. https://www.healthaffairs.org/doi/10.1377/hlthaff.2025.01683
- Hale J, Hong N, Hopkins B, Lyons S, Molloy E, Congressional Budget Office Coverage Team. Health Insurance Coverage Projections For The US Population And Sources Of Coverage, By Age, 2024–34. Health Affairs. Published Jun 18, 2024. https://www.healthaffairs.org/doi/10.1377/hlthaff.2024.00460
- Centers for Medicare & Medicaid Services (CMS). Participation Continues to Grow in CMS’ Accountable Care Organization Initiatives in 2024 (Press release). Jan 29, 2024. https://www.cms.gov/newsroom/press-releases/participation-continues-grow-cms-accountable-care-organization-initiatives-2024
.avif)