2026 | INDUSTRY INSIGHTS
National Health Expenditure Update DME Outlook 2026
Industry Insights SUMMARY The latest release of National Health Expenditure (NHE) data provides valuable insights into the future of the durable medical equipment (DME) industry. With healthcare spending continuing to rise and the population aging rapidly, DME is well-positioned to play a central role in the evolving care landscape, which is validated through national health expenditure data analyzed by VGM Industry Insights.
MARKET GROWTH & MOMENTUM According to the 2026 projections, spending on DME is expected to grow significantly—from $55 billion in 2026 to more than $81 billion by 2034. This represents a compound annual growth rate (CAGR) of approximately 5%, signaling a strong and steady expansion of the market.
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When looking at spend across all payers and sites of care, DME is expected to account for 2.74% of health expenditures in 2026. Nursing care and hospital care have seen small decreases in their overall share of spending, while home health spending and demand continue to grow. By 2034, home health will make up 9.56% of spend, which is up from 7.71% in 2025.
GROWTH DRIVERS The growth of the DME industry is being fueled by a combination of price increases and rising demand, though demand is clearly the dominant force. While price growth has been relatively modest—driven by inflation, supply chain pressures, and limited pricing flexibility—demand is surging due to structural changes in the healthcare system. An aging population, the increasing prevalence of chronic conditions, and the expansion of home-based care models are all contributing to this demand. In fact, analysis of the latest price index data shows that 72% of the projected growth in the DME industry through 2034 will be attributable to new demand rather than price inflation. This is a strong indicator of the industry’s long-term health and relevance. 2026 |
INDUSTRY INSIGHTS | National Health Expenditure Update - DME Outlook
72% of the projected growth in the DME industry through 2034 will be attributable to new demand
72%
PAYER MIX: MEDICARE ADVANTAGE ON THE RISE Understanding the payer mix is essential for DME industry stakeholders navigating today’s reimbursement environment. In 2026, DME spending is expected to be split between private insurance (39%), Medicare (39%), and Medicaid (22%). However, by 2034 Medicare’s share is expected to rise to 43%, reflecting both demographic trends and policy shifts. NHE data shows that as of 2026, there are 65M people 65+, and by 2034, this number will approach 74M. In 2026 alone, 22% of DME spending will come from Medicare Advantage plans, compared to 16% from traditional Medicare. By 2034, MA spend is projected to reach 27%.
CHALLENGES & OPPORTUNITIES WITH MEDICARE ADVANTAGE The rise of Medicare Advantage presents both challenges and opportunities for DME suppliers. On one hand, Medicare Advantage plans often introduce administrative complexities, such as prior authorization requirements, narrow provider networks, and downward pressure on reimbursement rates. These factors can create friction for suppliers and limit patient access to the necessary equipment. On the other hand, Medicare Advantage also opens the door to value-based partnerships and innovative care models. As these plans continue to emphasize home-based care and aging in place, DMEs have an opportunity to demonstrate their value by supporting better outcomes and lower costs. Leveraging outcomes data and aligning with Medicare Advantage plan goals will be key to success in this space.
KEY TAKEAWAYS The durable medical equipment industry is on a clear path of demand-driven growth, supported by demographic trends and a shift in care delivery models. As the market continues to expand rapidly, shifts in site-of-care and the evolving payer landscape are compelling DME providers to align more strategically with health systems and payers more than ever before. For this reason, larger volumes of DMEs are shifting to a smaller number of providers. In this dynamic environment, it is important for industry stakeholders to stay informed and agile as these trends continue to reshape the industry. In conclusion, here are three action steps for industry stakeholders to take: 1. Understand the evolving payer landscape across the healthcare continuum, highlighting shifts in site of care that complement opportunities for the DME industry. 2. Align with the priorities of Medicare Advantage plans, as their presence is only going to continue growing. 3. Invest in data-driven value propositions to articulate the immense value the DME industry has.
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INDUSTRY INSIGHTS | National Health Expenditure Update - DME Outlook
VGM Industry Insights provides data-driven analysis and trends within the durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) sector. Our focus areas include market trends, innovation, and strategic decision-making, helping stakeholders stay informed and competitive. We are committed to a forward-thinking approach, continuously monitoring industry developments to drive progress and innovation.
ALAN MORRIS SVP of Strategy
TYLER COULANDER Market Strategy Manager