Denver ? Fueled by soaring hospital and prescription drug costs, medical spending is accelerating faster than government economists had expected, reaching 14 percent of the gross domestic product last year for the first time, according to new projections.

The development marks the end of nearly a decade of fairly stable health expenditures, which have remained just above 13 percent of the GDP since 1992, the office of the actuary at the federal Centers for Medicare and Medicaid Services said in a report released Monday.

It also marks official confirmation that rising medical costs are consuming a larger slice of the economic pie and that they appear on course to do so throughout the next decade. By 2011, health-care expenditures are projected to more than double to $2.8 trillion annually and account for 17 percent of GDP, the government forecasters predict in the new study, published in Health Affairs.

Delaying cuts

Political pressure by health-care providers to forestall payment cuts is a virtual certainty in the years ahead, experts said. Currently, doctors are trying to roll back a planned 5.4 percent reduction in Medicare fees scheduled for next year, claiming the results for their elderly patients’ access to services would be disastrous.

Meanwhile, Medicaid expenses swelled 11.5 percent in 2001, after an 8.6 percent increase the year before. Medicaid is a joint state-federal program for people who are poor and disabled. As the economy tumbled into recession last year and states’ budget surpluses were depleted, soaring Medicaid costs have become one of lawmakers’ biggest headaches.

Funding increases

Public health programs are getting new funding after the anthrax attacks last fall. Federal spending on public health is set to climb 34.2 percent this year, following a 15.9 increase in 2001, government analysts said.

On the private side of the health spending equation, sharp increases in premiums for employer-sponsored insurance have been well documented over the last year, as has another trend: the decision by employers to pass on more costs to employees in the form of higher deductibles and co-payments.

While government forecasters predict a slow-down in expenses for private medical plans after 2002, they warn this probably will happen because employers will reduce their share of insurance-related costs and turn again to more restrictive forms of managed care such as HMOs. Consumers who want a broader range of hospital and doctor choices will pay significantly more, predicted Paul Ginsburg, president of the Center for Studying Health System Change.

Also, analysts believe more employers are likely to drop insurance coverage for employees, swelling the ranks of the 39 million uninsured people in the U.S.

Many cost-control strategies used during the late 1990s have stopped working as managed care has fallen into disfavor, Ginsburg said.