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U.S. Health Care Spending to Double by 2017, Report Predicts

Spending could hit $4.3 trillion, account for one-fifth of gross domestic product,,,,

TUESDAY, Feb. 26 (HealthDay News) -- Spending on health care in the United States could double by 2017, reaching $4.3 trillion and accounting for 19.5 percent of the nation's gross domestic product, a new government report shows.

This finding follows last month's report that, for the first time, health care spending grew to more than $2.1 trillion in 2006, accounting for 16 percent of gross domestic product. Moreover, as baby boomers begin to enter the Medicare system, there will be a major shift in health care spending from the private to the public sector.

"Our expectation is that growth in health spending is expected to be steady over the projection, which is 2007 through 2017, at 6.7 percent per year," report co-author Andrea Sisko, an economist with the Centers for Medicare and Medicaid Services, said during an afternoon teleconference on Monday.

"At the same time, we are expecting economic growth to slow to an average annual rate of 4.7 percent. As a result, the combination of steady health spending growth and slowing economic growth will lead to the health care part of gross domestic product rising to nearly 20 percent by 2017, nearly one-fifth of the economy, Sisko said.

The report was published in the Feb. 26 online edition of Health Affairs.

Sisko noted that growth in public spending on health care will accelerate through 2017, while there will be a general decrease in spending by the private sector. "The acceleration in public spending growth is due to the leading edge of the baby boomer generation enrolling in Medicare," she said.

The decrease in private spending growth is related to the expected slowdown in overall economic growth, Sisko said. In addition, the report authors are expecting that disposable income will also decrease during the period, playing a part in the slowdown in private health spending.

The increase in private health care spending will drop from 6.6 percent in 2009 to 5.9 percent by 2017, according to the report.

In fact, by 2017, Medicare spending is expected to account for $884 billion, slightly over one-fifth of all national health spending. This is up from the projected spending level of $427 billion for 2007.

Hospital spending is expected to increase and gradually slow down through 2017, going from $696.7 billion in 2007 to more than $1.3 trillion in 2017. Prescription drug spending is expected to slow down initially and then start to accelerate through 2017, Sisko said. Drug spending will increase from $231.3 billion in 2007 to $515.7 billion in 2017.

This year, Medicaid spending is projected to grow 6.8 percent to $361.2 billion. Over the next 10 years, the program is expected to grow an average of 7.9 percent each year, reaching $717.3 billion or 16.8 percent of health spending by 2017, according to the report.

More information

For more on health care costs, visit the National Coalition on Health Care.

SOURCES: Feb. 25, 2008, teleconference with Andrea Sisko, economist, Centers for Medicare and Medicaid Services, Baltimore; Feb. 26, 2008, Health Affairs

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