Health and Science

Expect bump in health spending next year

Maggie Fox
Martin Barraud | OJO+ | Getty Images

Americans are spending more on health care than before, but not as much as in the past, according to a new government report. It says the sluggish economy, combined with the drastic budget cuts forced by Congress, will slow the ballooning national health-care budget to 4 percent growth this year.

But next year, growth will pop to 6 percent, fed by 11 million newly insured Americans and a batch of aging Baby Boomers checking in for their Medicare appointments, the Centers for Medicare and Medicaid Services forecasts. They said 2.9 million of these newly insured people will get private health insurance, both on the new health insurance exchanges and privately purchased.

And for the decade spanning 2012 to 2022, health costs will grow by 5.8 percent, just a little faster than the rest of the economy as measured by gross domestic product, the actuaries at CMS say. And by that year, 30 million Americans will have newly gained either private health insurance or Medicaid coverage through Obamacare, they project.

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Cheating the health care system
Cheating the health care system

While this might look like scary growth in spending, it's less than during some past times, says Gigi Cuckler, an economist who helped prepare the report. "It's slower than what we have observed over the longer term history," Cuckler told reporters. In 1990, health spending ballooned by just under 12 percent and it grew by 7.4 percent per year on average from 1990 to 2007, she said.

Overall, Americans spent $2.8 trillion on health services last year, according to the CMS report, published in the journal Health Affairs. That includes spending by individuals, businesses, the federal government and state and local governments.

The 2010 Affordable Care Act, more commonly known as Obamacare, will add just 0.1 percent to health spending a year. But that adds up to $621 billion over 10 years, the CMS actuaries calculate. They say it's too soon to say whether the reforms enacted by Congress as part of the law will affect health spending much. Right now, they say, it's pretty closely linked to bigger economic cycles.

By 2022, Americans will be spending more than $5 trillion on health care, half of that paid for by federal, state and local government. Currently, government health spending makes up 4.6 percent of GDP.

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Earlier this week, the nonpartisan Congressional Budget Office said that would almost double by 2038, to 8 percent of GDP. Total spending on health was 16.4 percent of GDP in 2011, the CBO says; those are the latest figures available.

Spending on prescription drugs has actually fallen, the report finds, by just under 1 percent in 2012. This is partly because several name brand drugs went generic. But expect those costs to go up. "From 2015 to 2022, projected annual average growth in prescription drug spending will be 6.5 percent as increases in insurance coverage and disposable income enable more consumers to fill prescriptions," CMS said in a separate statement.

Americans spent more out of pocket on health care, on hospitals and on doctors, but the growth in spending in all these areas slowed, the report finds.

By Maggie Fox of NBC News