Sharp rise seen in health costs
WASHINGTON By 2017, consumers and taxpayers will spend more than $4 trillion on health care, accounting for one of every $5 spent, the federal government projects.
The 6.7 percent annual increase in spending is nearly three times the rate of inflation, the Centers for Medicare and Medicaid Services said Monday. With the aging population, the federal government will be picking up the tab for a growing share of the nation’s medical expenses. Overall, federal and state governments accounted for about 46 percent of health expenditures in 2006. That percentage will increase to 49 percent over the next decade.
“Health is projected to consume an expanding share of the economy, which means that policymakers, insurers and the public will face increasingly difficult decisions about the way health care is delivered and paid for,” CMS economists said.
Overall health care spending in 2017 was estimated to increase to $4.3 trillion.
In 2006, people and the government spent $2.1 trillion on health care, an average of $7,026 a person. In 2017, health spending will cost an estimated $13,101 a person.
In his budget for next year, President Bush recommended slowing the yearly growth of Medicare from about 7 percent to about 5 percent. The slowdown would occur primarily by freezing reimbursement rates for the next three years. The government economists say it’s hardly a new trend that the health care sector will grow more quickly than the overall economy. Over the past 30 years, health spending has exceeded growth in the gross domestic product by about 2.7 percentage points each year. Over the coming decade, that difference is expected to narrow slightly. Still, the continued gap is worrisome, said the agency’s acting administrator, Kerry Weems. He said consumers, particularly businesses, need more information about the quality and cost of care.
“We have an approaching crisis in this country unless we change the way we do business,” Weems said.
Within the health sector, economists project that spending on hospital care will increase at rate of 6.9 percent a year over the coming decade, spending on physician services will rise 5.9 percent annually, and spending on nursing homes will grow 5.2 percent a year.
The economists’ report will be published online by the journal Health Affairs.