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Archive for Wednesday, February 22, 2006

Health spending expected to double in 10 years

February 22, 2006

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— National health care spending will double to $4 trillion a year over the next decade, outpacing the growth of wages, inflation and the U.S. economy as a whole, according to new government projections released Tuesday.

By 2015, one in every five dollars spent in the United States will go toward medical costs.

The sobering cost data reflect the impact of aging baby boomers born before 1964, the cost of the Medicare prescription-drug benefit, declining rates of insurance coverage and rising hospital costs, among other factors.

The projections estimate that collective public and private spending for health care will average about $12,320 per person in 2015, compared with $6,683 per person in 2005.

Total health spending is expected to grow 7.2 percent a year over the next 10 years, more than 2 percentage points faster than projected growth in gross domestic product, the total value of goods and services, over the same period, according to the annual report by actuaries from the federal Centers for Medicare and Medicaid Services.

The increased spending on health care, combined with a trend by private insurers to pass more costs on to consumers, means fewer people, particularly the working poor, will be able to afford health care in the coming years.

Economist Paul Ginsburg, president of The Center for Studying Health System Change, a nonpartisan health research group in Washington, said: "When spending on health care goes up faster than earnings, lower-paid people are priced out of the health insurance market."

The long-term projections also portend greater fiscal pressure on states and the federal government, whose tax revenues typically grow with gross domestic product (GDP).

"But if GDP is being outstripped by health care spending," Ginsburg said, "it will cause greater problems paying for programs like Medicaid and Medicare," the public health insurance programs for the poor and for the elderly.

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