(Reuters) - U.S. health spending is expected to grow at an average rate of 5.5 percent every year from 2018 over the next decade and will reach nearly $6 trillion by 2027 as more people become eligible for Medicare, a government health agency said on Wednesday.

FILE PHOTO: A nurse prepares a bag of saline at Intermountain Healthcare's Utah Valley Regional Medical Center in Provo, Utah April 1, 2014. REUTERS/George Frey

Rising income levels, better employment rate and more people enrolling for Medicare, the federal health insurance program for people aged 65 and above and the disabled, will cause healthcare spending to rise to 19.4 percent of the U.S. economy by 2027, the Centers for Medicare & Medicaid Services (CMS) said.

In 2017, healthcare spending accounted for 17.9 percent of the country’s gross domestic product.

Annual spending growth for Medicare is expected to average 7.4 percent over the 10-year period, CMS said.

That number exceeds spending projections for Medicaid -- the government insurance program for low income Americans -- and private health insurance plans, which are expected to average 5.5 percent and 4.8 percent respectively, over the same period.

The CMS said it expects Medicare enrollment growth to peak at 2.9 percent in 2019.

Prescription drug spending is also expected to rise and average 5.6 percent annually between 2018 and 2027 as employers and insurers push patients with chronic conditions to adhere to medications better, and as new and expensive drugs enter the market.

Hospital spending growth is projected to average 5.6 percent per year between 2018 and 2027.

By 2027, federal, state and local governments are expected to fund 47 percent of national health spending, compared with 45 percent in 2017, according to the report.

The CMS said that all projections are reflective of current laws and do not take into account policy changes under consideration.