National health spending may nearly double by 2019

2009 saw the largest recorded one-year increase in health spending as a percentage of the economy, and it's only going up, CMS actuaries said.

By Doug Trapp — Posted Feb. 18, 2010

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A shrinking economy combined with greater public health spending in 2009 produced a 1.1 percentage point increase in national health spending as a share of gross domestic product -- the largest single-year jump since records began in 1960.

National health spending as a share of gross domestic product reached 17.3% in 2009. This was largely because of a spike in Medicaid spending and relatively low growth in private spending, according to "Health Spending Projections Through 2019: The Recession's Impact Continues," published in Health Affairs on Feb. 4.

National health spending increased by 5.7% in 2009 to reach $2.5 trillion, up from a 4.4% increase in 2008, according to the report's preliminary estimates, produced by the Centers for Medicare & Medicaid Services Office of the Actuary.

Spending on physicians and clinical services increased by 6.3% in 2009 to $527.6 billion, 1.3 percentage points faster than in 2008. This increase also was driven largely by higher Medicaid spending and slightly faster private spending. Spending on doctors is expected to reach 6.6% by 2017 as the economy recovers.

Medicaid spending increased by nearly 10% to $378.3 billion -- the fastest rate since 2002 -- due to a hike in federal funding. State and local Medicaid spending decreased in 2009. A deceleration in the use of prescription drugs and hospitals also slowed Medicare spending growth in 2009. Program spending was 8.1% higher, compared with an 8.6% increase in 2008.

Although CMS actuaries estimate the growth of national health spending will slow in 2010, national spending will nearly double by 2019 to reach $4.5 trillion, or 19.3% of gross domestic product. Report authors did not factor in the potential impact of national health system reform legislation in their calculations, according to CMS actuary Christopher Truffer.

"But we do expect that under current law, health care spending will on average grow faster than the overall economy and that the public share of health spending will continue to increase over the next decade," Truffer said. The report estimates that public health spending will overtake private spending by 2012.

A Medicare physician payment cut scheduled to take effect March 1 would significantly impact spending on doctors, according to the report. Under the cuts, total spending on physicians and clinics would increase by 1.5% in 2010. If prevented, such spending would increase by 4.1%.

The report is available online (link).

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