CBO

[SEC=UGA]

(AP) WASHINGTON - The nation's health care tab is on track to hit $4.6 trillion in 2020, accounting for about $1 of every $5 in the economy, government number crunchers estimate in a report out Thursday.

 

 

How much is that? Including government and private money, health care spending in 2020 will average $13,710 for every man, woman and child, says Medicare's Office of the Actuary.

 

 

By comparison, U.S. health care spending this year is projected to top $2.7 trillion, or about $8,650 per capita, roughly $1 of $6 in the economy. Most of that spending is for care for the sickest people.

 

 

The report from Medicare economists and statisticians is an annual barometer of a trend that many experts say is unsustainable but doesn't seem to be slowing down. A political compromise over the nation's debt and deficits might succeed in tapping the brakes on health care, but polarized lawmakers have been unable to deliver a deal.

 

 

The analysis found that President Barack Obama's health care overhaul would only be a modest contributor to growing costs, even though an additional 30 million people who would be otherwise uninsured stand to gain coverage.

 

 

The main reasons that health care spending keeps growing faster than the economy are the high cost of medical innovations and an aging society that consumes increasing levels of service.

 

 

Many of the newly insured people under the health care law will be younger and healthier. As a result, they are expected to use more doctor visits and prescription drugs and relatively less of pricey hospital care. Health care spending will jump by 8 percent in 2014, when the law's coverage expansion kicks in. But over the 2010-2020 period covered by the estimate, the average yearly growth in health care spending will be only 0.1 percentage point higher than without Obama's overhaul.

 

 

Part of the reason for that optimistic prognosis is that cuts and cost controls in the health care law start to bite down late in the decade. However, the same nonpartisan Medicare experts who produced Thursday's estimate have previously questioned whether that austerity will be politically sustainable if hospitals and other providers start going out of business as a result. The actuary's office is responsible for long-range cost estimates.

 

 

The report found that health care spending in 2010 grew at a historically low rate of 3.9 percent, partly because of the sluggish economy. That will change as the economy shakes off the lingering effects of the recession.

 

 

Government, already the dominant player because of Medicare and Medicaid, will become even more important. By 2020, federal, state and local government health care spending will account for just under half the total tab, up from 45 percent currently. As the health care law's coverage expansion takes effect, "health care financing is anticipated to further shift toward governments," the report said.

 

 

Estimates from previous years had projected that the government share would already be at the 50 percent mark, but the actuary's office changed its method for making the complex calculations. Under the previous approach, some private payments such as worker's compensation insurance had been counted in the government column. Technical accuracy — not political pressure — was behind that change, said Stephen Heffler, one of the experts who work on the estimates.

 

 

Separately, another new report finds that the United States continues to spend far more on health care than other economically developed countries. The study by the Commonwealth Fund found that U.S. health care spending per person in 2008 was more than double the median — or midpoint- for other leading economies. Although survival rates for some cancers were higher in the U.S., the report found that quality of care overall was not markedly better.

 

 

The Medicare actuary's estimates for health care spending are published in the journal Health Affairs.

 

 

NEW YORK (CNNMoney) -- The U.S. government will foot the bill for half of all health care costs in the United States by 2020, according to a government report released Thursday.

 

That's up from 44% just two years ago, and reflects both the rising cost of health care and the fact that millions more people will have access to it under health reform, said the Centers for Medicare and Medicaid Services.

 

Total health care spending is expected to nearly double to $4.6 trillion in 2020, from $2.6 trillion in 2010.

 

The agency makes these projections annually, but this is the first year that they include the impact of health reform, which expands insurance coverage to millions through government subsidized initiatives.

 

By 2020, nearly 30 million additional people are expected to have health insurance because of reform. But that will only have a marginal impact on health spending over the next few years, the report said.

 

From 2010 through 2020, the government expects health care spending to grow at an average annual rate of 5.8% -- including the impact of health reform. The CMS had previously forecast a growth rate of 5.7%.

 

Still, the new estimate far outpaces projected growth in the U.S. economy. The government estimates that by 2020, health care spending will account for 20% of the nation's economic output -- up from 17.6% of GDP in 2010.

 

The government report drew conflicting responses from industry watchers.

 

Leslie Norwalk, former acting administrator for CMS, said the report paints a "very difficult" situation for the country.

 

"The report shows health care spending is growing faster than the economy and faster than inflation," Norwalk said. "Health care spending will double by 2020, and the government will pay 50% of that -- this is troubling. How is that good, especially in the context of the current debate on the debt ceiling?"

 

Deborah Chollet, senior fellow and health economist at Mathematica Policy Research, took a different view of the report.

 

"The good news is that many more people will get health care coverage, for very little change in the rate of increase in overall health care spending," Chollet said.

 

Chollet said the report shows that health reform is having very little impact in driving up health care costs through 2020.

 

Instead, Chollet suspects health care spending is going up more because of higher prices for care, greater utilization of health care services, and changing demographics tied to a larger aging population.

 

Over the 10-year period, the report showed that the biggest annual jump in health care spending will happen in 2014 when health reform is fully implemented.

 

CMS estimates that in 2014 about 23 million uninsured consumers will gain access to health insurance, mainly through government programs such as Medicaid and through the creation of federal and state-funded health insurance exchanges.

 

As a result, the government expects Medicaid spending to surge 20% in 2014 and private health insurance spending to increase 9.4%.

 

Norwalk said the estimated sharp surge in Medicaid spending just in one year, is very concerning given that states are already struggling with their budgets.

 

As millions more gain access to health insurance, the government expects spending on prescription drugs, physician and hospital services to increase as well.

 

CMS expects prescription drug spending to jump by 10.7% in 2014 and to account for 11% of national health spending by 2020. Spending on physician and clinical services is forecast to rise by 8.9% by 2014, representing 19% of overall health care spending.