News & Events

Boston Globe: Health tab to soar in decade

Health tab to soar in decade

By Ricardo Alonso-Zaldivar

Associated Press / July 29, 2011

WASHINGTON – The nation’s health care tab is on track to hit $4.6 trillion in 2020, accounting for about $1 of every $5 in the economy, government number crunchers estimate in a report released yesterday.

How much is that? Including government and private money, health care spending in 2020 will average $13,710 for every man, woman, and child, according to Medicare’s Office of the Actuary.

Compare it with this year, when US health care spending is projected to top $2.7 trillion, about $8,650 per capita, or roughly $1 of $6 in the economy. Most of those dollars go to provide care for the sickest people.

Along with rising costs, the report found that the share of the health care tab paid by the government keeps growing, approaching half the total.

The update from Medicare economists and statisticians is an annual barometer of a trend that many analysts say is unsustainable, but doesn’t seem to be slowing. A political compromise over the nation’s debt and deficits might succeed in tapping the brakes on health care, but lawmakers have been unable to deliver a deal.

The analysis found that President Obama’s health care overhaul would only be a modest contributor to growing costs, even though an additional 30 million otherwise uninsured people stand to gain coverage.

Instead, health care spending keeps growing faster than the economy because of high cost of medical innovations and an aging society that consumes increasing levels of service.

Many of the newly insured people under the health care law will be younger and healthier, so they cost less. Over a million young adults under age 26 have already gained coverage through their parents’ insurance. Millions more will get insurance when the law’s big coverage expansion kicks off in 2014.

That year, health care spending will jump by 8 percent. But over the 2010-2020 period covered by the estimate, the average yearly growth in spending will be only 0.1 percentage point higher than without Obama’s overhaul.

One reason for the optimistic prognosis is that cuts and cost controls in the law start to bite down late in the decade. However, the same nonpartisan Medicare specialists who produced the estimate have previously questioned whether that austerity will be politically sustainable. If hospitals and other providers start going out of business, Congress may reverse the cuts.

The Medicare actuary’s report on health care spending is published in the journal Health Affairs.

© Copyright 2011 Globe Newspaper Company.