MACRO OVERVIEW

Healthcare reaches an estimated 18.4% of GDP in 2025, on track for 20.6% by 2034

Healthcare's share of the economy continues to grow. CMS reports 2025 at an estimated 18.4% of GDP, up from 18.0% actual in 2024, and predicts 20.6% by 2034, with health spending growing 5.4% a year against 4.1% for GDP. The payer base behind healthcare spending is broad and stable; private sponsors fund roughly 52% and government 48%. A split CMS expects to hold near even through 2034, with private insurance at $1,645b (31%), Medicare $1,118b (21%) and Medicaid $932b (18%) in 2024. For construction, that creates a strong long-term tailwind. More spending flows to facilities, and public dollars anchor demand through cycles when private capital hesitates.

Source: CMS NHE Projections 2025-2034 (Health Affairs, June 24, 2026, DOI 10.1377/hlthaff.2026.00642). 2024 actual per CMS Jan 2026 (DOI 10.1377/hlthaff.2025.01683).

Key metrics at a glance

184%

2025E: HC Share of GDP Up from 18.0% actual in 2024

206%

2034 Projected HC % of GDP +2.2pp above the 2025 estimate

197%

2020 COVID Peak (Temporary) Spending rose as GDP fell

$566T

2025E NHE (+7.3% YoY) 2024 actual: $5.3T, +7.2% (Jan 2026)

54%

NHE Avg Annual Growth 2025-34 Outpacing GDP growth of 4.1%

Source: CMS NHE 2024 Actuals (Hartman et al., Health Affairs, Jan 14 2026, DOI 10.1377/hlthaff.2025.01683). Government sponsorship = 48% in 2024. Projections: CMS, June 24, 2026.

Healthcare services inflation cools to 3.0%, dropping below headline PCE

Healthcare services inflation eased to 3.0% year on year in Q2 2026, falling below headline PCE inflation of +3.9%. The pressure is further up the supply chain. Construction input costs are rising by 7.9% a year, while healthcare building output prices are increasing by 5.0% in August 2026.

Source: BEA, PCE price indexes through Q2 2026 (July 31 vintage). Narrative PPI data: BLS, August 2026 (released September 10, 2026). Inflation rates are year on year.

Turner & Townsend indices show healthcare costs moving above the wider market, margins narrowing, and escalation holding close to 5%

In late 2025, healthcare construction costs exceeded the all-property benchmark for the first time since 2020. By Q2 2026 they were up 6.0% year on year (peak +6.9% in Q1) versus +5.3% for all property types, sitting roughly 43% above the Q4 2019 baseline. This shift is largely being driven by tariff-exposed MEP packages.

Margin growth shows the same shift: healthcare held between 3.3% and 4.5% through the 2024 trough while all-property types sank to 1.2%, and that premium is normalizing at 4.1% versus 2.8% in Q2 2026 as all-property types firm into the mid-4s by late 2027.

The model's bottom line: bid-price escalation rose 4.5% in 2025 and will remain close to 5.0% in 2026, easing to 4.25% by 2028. Tariff pass-through and electrical-equipment scarcity are the swing factors. Healthcare is no longer moving in line with the wider market, and bids will stay firm even as bidding elsewhere gets more competitive.

Source: Turner & Townsend proprietary model (TCC/CBRE NBCI, Q2 2026 vintage). Inputs: BLS PPI, BEA, Oxford Economics, CBRE Strategic Investment Consulting.