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U.S. Health Care Spending Likely To Double By 2011

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NU Online News Service, March 13, 12:15 p.m. — Washington

Increases in U.S. health care spending could soon lead to dramatic changes in the private health insurance market, according to government forecasters.

Even if the country’s health care costs go up an average of just 7.3% per year, total annual health care spending is likely to reach $2.8 trillion, or 17% of gross domestic product, in 2011, up from $1.3 trillion, or 13% of GDP, in 2000, officials say.

A team led by Stephen Heffler, deputy director of the National Health Statistics Group at the Centers for Medicare and Medicaid Services, has published an article discussing the statistics in the journal Health Affairs.

The article is based on the government’s National Health Expenditures Projections, which are summarized on the Web at

Private and government health care spending have been increasing rapidly in recent years because of the aging of the U.S. population, increases in household income, a shift to less restrictive forms of managed care, and rising price inflation, the authors of the Health Affairs article write.

The authors predict the rate of increase will reach 9.4% this year, up from 6.9% in 2000.

The rate could begin to decline in 2003, and fall as low as 5.9% in 2011, if consumers and employers react to the increases by reducing purchases of private insurance, accepting insured plans with higher out-of-pocket costs, and even returning to more restrictive forms of managed care, the report says.

Karen Ignagni, president of the American Association of Health Plans, Washington, says the report should serve as a “sobering reminder” for those who seek to dismantle health plans.

“We face a stark choice in health care,” Ignagni says. “One choice is to do nothing, continue down the present path, and hope the crisis of affordability will simply go away.”

Or, Ignagni says, “we can seize upon this opportunity to jump-start a debate that focuses on the real issues at hand: rising costs and affordability, the growing ranks of the uninsured and the need for comprehensive Medicare and Medicaid reform.”