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Health Spending to Double by 2018

Obama Calls Health Care America's 'Most Pressing Fiscal Challenge'

WebMD Health News

Feb. 24, 2009 -- National spending on health care is expected to double to $4.4 trillion per year by 2018, a projection likely to be the underpinning of an expected call for broad health reform by President Obama in a televised address to Congress this evening.

At the same time, more than 20% of the economy will be taken up by health costs by 2018, according to government projections released today. Health care currently makes up about 16.2% of the U.S. economy.

The projections on health costs were released by Centers for Medicare and Medicaid Services.

The president used a White House summit on Monday to push an effort to curb rising health spending because it is a drag on family budgets, businesses, and the nation's economy. In a budget outline due later this week, Obama is expected to call for cuts to some controversial Medicare insurance programs as a way to begin to slow cost growth in the program.

On Monday, Obama called health care "the single most pressing fiscal challenge we face, by far."

Even though health care costs are rising, they're actually growing more slowly now than they did a decade ago. But with the economy now in a deepening recession, officials warn that public and private health spending is set to have an even bigger impact on deficits and the economy.

"Absent something that changes the current circumstances, the differential [between rising health care costs and the economy] will occur for a long time to come, making health care harder and harder to pay for," says Richard Foster, the chief actuary for the Centers for Medicare and Medicaid Services, which released today's projections.

Meanwhile, an aging population is threatening to balloon Medicare spending and overall health costs.

"The path to fiscal responsibility must run directly through health care," White House budget director Peter Orszag said Monday.

"We face a daunting system-wide health care problem," says Robert Greenstein, president of the Center for Budget and Policy Priorities, a liberal-leaning economic think tank in Washington.

Health Reform Agenda

The president is expected to lay out a path to reform the U.S. health care system in tonight's speech before a joint session of Congress. But it will likely be months before lawmakers are ready with legislation that would revamp the system.

Rising costs are at the heart of the problem, along with an estimated 46 million Americans who have no health coverage. Businesses are also cutting back on workers' medical benefits in an effort to save money, and that can leave workers exposed to out-of-pocket health costs if they get sick.

"We simply cannot afford as a nation, and we cannot afford as businesses, to maintain the status quo, because it is unsustainable," John J. Castellani, president of the Business Roundtable, an employer group, said at the White House conference Monday.

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