Health Spending Consumes More Of U.S. Economy, Will Tip Toward Government

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A new report by federal actuaries shows government programs will pay for more than half of all U.S. health care spending by 2012, and that total spending on health grew as a share of the economy by 1.1 percent last year to 17.3 percent, the largest leap ever, the Los Angeles Times reports. "The almost $2.5 trillion spent in 2009 was $134 billion more than the previous year, when healthcare consumed 16.2% of the gross domestic product, according to an annual report by independent actuaries at the federal Centers for Medicare and Medicaid Services, or CMS, scheduled for release Thursday" (Levey, 2/4).

"For all the hue and cry over a government takeover of health care, it's happening anyway," the Associated Press/Washington Post reports. "The shift to a health care sector dominated by government is being speeded up by the deep economic recession and the aging of the Baby Boomers, millions of whom will soon start signing up for Medicare," the AP reports. And, the shift could come as early as next year if Congress blocks scheduled cuts to physicians' Medicare payments (Alonso-Zaldivar, 2/4).

Gail Wilensky, a former director of the Medicare agency, told Kaiser Health News, the report is "a reminder of the challenges ahead of us, particularly with regard to the huge, unfunded liability of Medicare, which [suggests] those public sector dollars are likely to grow unless we significantly redesign." The government share is expected to continue increasing to 52 percent in 2019, the last year predicted in the report (Weaver, 2/4).

Also, as Bloomberg reports, "All health-care spending will probably grow at an average annual rate of 6.1 percent from 2009 through 2019, which is 1.7 percentage points faster than the projected growth in the economy, as measured in gross domestic product, the economists said. Obama budget director Peter Orszag said yesterday in Congressional testimony that "health-care costs will fuel a growing budget deficit and 'we cannot close the long-term fiscal shortfall' without bringing them under control" (Thomas, 2/4).

USA Today reports, "Experts such as Gary Claxton, who studies health care costs for the non-partisan Kaiser Family Foundation, say the growth in medical spending has been rising faster than the economy for decades. The report, he said, is the latest warning. 'It's a reminder, but it's no different from what we've known,' he said. 'As long as it's growing faster, it's going take over more and more of the economy'" (Fritze, 2/4).

This information was reprinted from kaiserhealthnews.org with kind permission from the Henry J. Kaiser Family Foundation. You can view the entire Kaiser Daily Health Policy Report, search the archives and sign up for email delivery at kaiserhealthnews.org.

© Henry J. Kaiser Family Foundation. All rights reserved.

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