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Health Spending to Double by 2017

Medical Costs Will Account for 20% of U.S. Economy, Report States

WebMD Health News

Feb. 26, 2008 -- Health care spending will take up a fifth of the U.S. economy in the next decade, according to government economic projections released today.

Government economists predict that the nation's total health care bill will nearly double from $2.2 trillion this year to $4.3 trillion by 2017. They also find that families and employers will spend less and less on health care as the economy slows and leaves fewer resources to cover medical costs.

Government economists called their assessment conservative because it assumes that current Medicare spending laws will remain in effect over the next decade. That includes deep cuts in government payments to doctors, which lawmakers are expected to repeal.

"Because Medicare projections are based on current law, they are likely understated," concludes the report, issued by the Centers for Medicare and Medicaid Services and published in the health policy journal Health Affairs.

The projections, though daunting, also show that health spending will grow at a steady 6.7% rate each year until 2017. But health costs will consume an ever-increasing portion of the gross domestic product as the economy slows, experts said.

Cost-Cutting Legislation

The predictions come one day after the Bush administration unveiled a new bill designed to cut Medicare spending. The bill was mandated by a law requiring new legislation as soon as certain spending thresholds are met, and such major legislation is unlikely to be passed this year, lawmakers say.

The bill was introduced in both houses of Congress. But some Democrats said they had no intention of advocating for cuts proposed by the White House.

"I am required by law to introduce the White House's legislation on Medicare today, but I'm compelled by my commitment to America's seniors to insist on better solutions," Sen. Max Baucus (D-Mont.), chairman of the Finance Committee, said in a statement.

Many Republicans have called for curbs in Medicare spending, including cuts to hospitals and other health providers. "Medicare is not sustainable on its current path. Soaring costs and a growing number of beneficiaries threaten to overwhelm the program," Rep. Jim McCrery (R-La.), the senior Republican on the House Ways and Means Committee, said in a statement.

The projections also come as Democratic candidates Sen. Hillary Clinton (D-N.Y.) and Barack Obama (D-Ill.) continue to debate their health plans. Both candidates vow to improve access to insurance and to cut health costs.

Those plans would have to be passed by Congress before they could be put into effect. But Tuesday's report suggested that they might do little to curb overall spending, at least in Medicare. That plan is expected to continue growing at 6.7% per year as the "leading edge" of the baby-boom generation becomes eligible for government-sponsored health care, the report concludes.

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