Forecast for health care costs sees spike

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By 2021, health care spending will account for about one-fifth of the U.S. economy, up from one-sixth today, according to a forecast released by the Centers for Medicare and Medicaid Services.

In other words, the three-year slowdown in health care use -- and costs -- brought on by the recession is not the "new normal," and does not suggest newfound frugality on the part of consumers or health care providers.

The good news is that the modest growth rate will continue for at least the next two years. But the rate will pick up speed in 2014, if the federal health care overhaul takes effect as designed.

Growth in national health care spending was "historically low" at 3.8 percent in 2009, the smallest increase on record, and 3.9 percent in 2010. Spending in 2011 is expected to be around 4 percent, with a similar growth rate in 2012 and 2013.

According to the CMS figures, U.S. spending would grow 7.4 percent in 2014, when millions of Americans are supposed to join the ranks of the insured.

"An estimated 22 million Americans are expected to gain coverage from the insurance expansions under the Affordable Care Act. The majority of the newly insured will be enrolled in either Medicaid or the new health insurance exchanges," the study said.

After 2014, according to the estimates, the rate increase will again flatten.

Whatever increases come after that will be driven primarily by aging baby boomers as they begin requiring more care.

If the health care overhaul doesn't take effect as written -- a ruling on the act is expected this month from the U.S. Supreme Court -- an estimated $478 billion would be saved over the next decade but about 30 million Americans would go without health insurance.

Also by 2021, CMS predicts that the government share of all health care spending would be about 50 percent, up from 46 percent now.

businessnews

Bill Toland: btoland@post-gazette.com or 412-263-2625. First Published June 17, 2012 12:00 AM


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