Health Costs Soon May Be 1/5 of Individuals' Expenses

WASHINGTON – Health care is expected to account for $1 of every $5 spent in the United States in another decade.

That means a rise in out-of-pocket expenses, such as the copays for medicine, from about $850 this year to about $1,400 in 2016, a 5.3 percent annual increase.

The cost of health insurance is projected to rise even more quickly during that same time — 6.4 percent annually.

Over the coming decade, spending on health care will continue to outpace the overall economy. By the year 2016, it will total nearly $4 trillion, economists at the Centers for Medicare and Medicaid Services said in a report being released Wednesday.

Today, the number is closer to $1 out of every $6, or $2 trillion.

Consumers are spending more on the latest treatments, despite their rising costs. For example, federal officials cite a significant increase in the use of imaging to detect blockages or other diseases.

Income will also play a significant role in the greater health spending. Historically, when income rises 1 percent, health expenditures go up about 1.5 percent, officials said.

"What that indicates is a desire to purchase good health," said John Poisal, deputy director of the government's National Health Statistics Group.

Dr. Mark McClellan, an analyst who used to oversee the Medicare and Medicaid programs, said greater spending on health care has its benefits. People are not having heart attacks because they're taking medicine that lowers their blood pressure and cholesterol. They're surviving cancer because of more frequent exams and new treatments.

"Greater health care spending is having a tremendous impact on the length and quality of people's lives," he said.

But the United States could be doing much better, he said.

"We know that much of the spending is going to treatments that are unnecessary or lead to medical errors, so we're not getting nearly as much value as we should," McClellan said.

Health and Human Services Secretary Mike Leavitt said the rising costs are creating anxiety for everyone and as well as a political will to change that trend.

"America's per capita health spending is the highest in the world," he said. "There is simply no place on the economic leader board for a nation that spends a fifth of its domestic product on health care."

The administration is pushing government agencies, insurers and health care providers to make information available that would help consumers become good shoppers. For example, Medicare lists the percentage of pneumonia patients at various hospitals who received a timely antibiotic, an indicator of the quality of care.

"The only force strong enough to change the course of health care is a marketplace where consumers have the information and the incentive to choose quality and keep costs low," Leavitt said.

The economists said their study doesn't determine how much the rising costs will affect the average American family. There are too many factors involved, particularly when the federal government accounts for about half of overall health spending through programs such as Medicare, Medicaid and the Department of Veterans Affairs.

The economists also predict that government programs will gradually replace employers when it comes to providing health insurance for millions of Americans.

"We are moving incrementally away from traditional sources of insurance, such as employer-based coverage, to a system comprising more federal and state government-provided health care," said the economists, whose report will be published in the journal Health Affairs.