Feds project spending of twice as much in 10 years, with Medicare taking brunt.
Cox Washington Bureau
Published on: 02/26/08
Washington —- Americans are likely to spend nearly twice as much on health care a decade from now, and the costs will shift from private insurance to Medicare as the baby boomer generation ages, federal analysts are reporting today.
The report by the Centers for Medicare and Medicaid Services predicts that health care spending will increase from just under one-sixth of the nation's economy last year to just over one-fifth by 2017. The report was published in the Web edition of the journal Health Affairs.
The nation's health care spending is expected to grow an average of 6.7 percent annually, from a total of $2.2 trillion last year to $4.3 trillion in 2017. That growth rate is expected to outpace the nation's economy by nearly 2 percent a year.
This trend means that "policy-makers, insurers, and the public collectively face some difficult decisions about the way health care is delivered and paid for," said Sean Keehan, an economist with CMS and one of the report's authors.
The largest factors causing the growth in health care spending are expected to be higher prices for medical services and the increased use of medical care.
Although the aging of the baby boom generation will not have much effect on the total amount spent for health care, it will cause a significant shift in who pays the bills.
Consumers are expected to pay a slightly smaller share of total health care costs out of their own pockets, while the share paid by private and public insurance will increase.
And those insured costs will shift from private, employer-based insurance coverage to public Medicare coverage.
The report predicted that prescription drug spending per person is expected to more than double from $761 last year to $1,537 by 2016.
Likewise, the big shift will be from private to public insurance coverage. Individuals will continue paying for about 18 percent of drug costs, but the share covered by private insurance is expected to decline from about 41 percent to 33 percent, while the share covered by public programs jumps from about 40 percent to 49 percent.
Kerry Weems, CMS' acting administrator, said the projection "reminds us that we need to accelerate our efforts to improve our health care delivery system to make sure that Medicare and Medicaid are sustainable for future generations of beneficiaries and taxpayers."
Spending on Medicare, the federal health care program for the elderly and disabled, will more than double, the report predicts, from $427 billion last year to $884 billion by 2017, when it will account for more than one-fifth of all health care spending in the United States.
On an annual basis, the growth in Medicare spending is expected to increase from about 6.5 percent last year to about 8 percent by 2017 because of the increased number of baby boomers receiving benefits.
Spending on Medicaid, the federal-state health care program for the poor, is expected to grow even faster, more than doubling from $338 billion last year to more than $717 billion by 2017, when it will account for one-sixth of the nation's health care spending.
Care for people within their homes is expected to roughly double per person from $178 last year to $343 in 2016. But nursing home care is expected to increase about 55 percent from $421 per person last year to $652 in 2016.



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