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CMS: Health Care To Absorb 20% Of GDP

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By 2015, U.S. residents could be spending $4 trillion a year on health care.

That figure could amount to about 20% of 2015 gross domestic product, according to economists and actuaries at the Centers for Medicare and Medicaid Services’ National Health Statistics Group.

Annual health spending growth could average 7.2% over the next decade, while national GDP may rise an average of only 2.1% per year, the forecasters estimate in an annual projection of health care cost trends.

Although employers and health insurers have succeeded at slowing growth in private health insurance premiums over the past 3 years, that slowdown could end soon, the forecasters warn.

Total private health insurance premium growth could fall to 6.8% for 2005, from 8.4% for 2004, but 2005 may be near the low point for the current health insurance underwriting cycle, the forecasters write.

The new Medicare Part D prescription drug program could help, by causing a 5% drop in benefit growth and premium growth, the forecasters add.

But “the slowdown in projected growth is expected to be reversed in 2007 as utilization increases,” the forecasters write. “A projected upturn in the underwriting cycle in 2007 will compound the forces pushing premium growth upward, peaking at 8.3% in 2009.”

Medicare spending could increase to $792 billion in 2015, from $309 billion in 2004, the forecasters predict.