Analysts: Health Care Costs to Keep Rising

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http://www.truthout.org/issues_06/022206HA.shtml

 

 

Analysts: Health Care Costs to Keep Rising

By Kevin Freking

The Associated Press

 

Tuesday 21 February 2006

 

Washington - Within a decade, an aging America will spend one of

every five dollars on health care, according to government analysts

who see no end to increases in the cost of going to the doctor and

taking medicine.

 

The nation's total health care bill by 2015: more than $4

trillion. Consumers will foot about half the bill, the government the

rest.

 

Hospital costs will rise more quickly than previously anticipated,

reflecting a construction boom for urban hospitals. Meanwhile, drug

costs are expected to be lower because of a greater reliance on

generics, and because insurers administering the new Medicare drug

benefit were able to negotiate steeper discounts than previously

anticipated.

 

The projections, published in the journal Health Affairs, come as

President Bush urges Americans to confront the rising cost of health

care. In his State of the Union address last month, the president

pushed health savings accounts, or HSAs, and the high-deductible

insurance plans that go with them.

 

The administration predicts that Americans would become more

thrifty consumers if they had to pay more of the upfront costs, which

occurs with health savings accounts.

 

" We don't expect HSAs to proliferate so dramatically that we would

have an impact similar to that of the managed care era of the '90s, "

said John Poisal, deputy director of the Centers for Medicare and

Medicaid Services' National Health Statistics Group. Then, health care

flattened out at 13 percent of gross domestic product.

 

Overall, the analysts forecast a 7.2 percent annual increase in

health care costs over the coming decade. That's in line with the 7.4

percent increase in 2005.

 

Still, the overall economy is projected to grow at a rate of only

5.1 percent over the coming decade, which means health care will play

an ever-growing role.

 

" These changes could force payers and providers to re-examine

fundamental questions regarding the delivery and financing of health

care services, " the analysts said.

 

Another trend within the new government projections is an

ever-growing reliance on the government to foot the bill for health

care. By the end of the next decade, the government will pay for about

half of the nation's medical costs.

 

Overall, the most important factor in health care spending is

income, the analysts said. As Americans make more money, they spend

more to get healthy. People making $90,000 are more likely to visit a

doctor and get their prescriptions filled than those who make $50,000,

Poisal said.

 

Investment in research, equipment and people also drives the

growth in health care spending, he said.

 

" It's consumption and investment, " Poisal said. " But primarily

it's about consumption. "

 

Medicare spending will more than double, from $309 billion in 2004

to $792 billion, in 2015. Medicaid spending will grow from $293

billion to $670 billion during the same time span.

 

The country's aging population is expected to drive increases in

two key areas of health care spending: nursing homes and home health.

 

Spending on nursing homes will grow from $121.7 billion in 2005 to

$216.8 billion in 2015. Home health will grow from about $49 billion

last year to $103.7 billion in 2015. It represents the nation's

fastest-growing sector in health care.

 

Analysts expect annual health cost increases in the next decade to

range from 6.8 percent in 2015 to 7.7 percent in 2008.

 

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