February 4, 2010 in Nation/World

Health care grows costlier

Report likely to fuel debate on reform

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WASHINGTON – In a stark reminder of growing costs, the government estimated today that health care consumed a record 17.3 percent of all spending in the U.S. economy last year – or roughly $2.5 trillion.

This was the single largest one-year jump in health care spending as a share of the nation’s gross domestic product since the government started keeping such records a half century ago.

And as soon as next year, more than half the nation’s total health care tab may fall to the government for the first time, according to an annual report by independent actuaries at the federal Centers for Medicare and Medicaid Services.

The rise in costs, driven in part by surging spending in the government Medicare and Medicaid programs and the bleak projections for the future, do not take into account changes that may come if Democrats succeed in reviving their health overhaul legislation.

The report, while issued by a nonpartisan accounting agency, appears likely to fuel further debate about the health bills now stalled in Congress.

In the absence of change, Wednesday’s report raises a grim prospect for the country – a health care system consuming an ever greater and potentially unsustainable share of the economy even as private health coverage lags.

“The health system is hurting, and we are seeing that in these numbers,” said Karen Davis, president of the Commonwealth Fund, a leading authority on health care policy.

The report also points up the financial cost of the so-called Great Recession and the growing pressure it is putting on state and local governments.

Federal and state spending on Medicaid, the nation’s primary health insurance program for low-income Americans, jumped nearly 10 percent in 2009, according to the report. Medicare spending, meanwhile, shot up just over 8 percent.

Obama and many health care experts have argued that reshaping the health care system would ultimately make it more efficient, even if overall health spending continues to increase — a claim Republicans dispute.

Fueled by new technology, an aging population, rising incomes and other changes, spending on medical care has been consuming a larger and larger share of the nation’s economy for years, jumping from about 5 percent of the gross domestic product in 1960 to nearly 14 percent in 2000.

But the recession that began in 2007 accelerated that trend. The broader economy contracted while health care spending continued to increase.

By 2020, one of every five dollars spent in America is expected to go to pay for health care.

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