Health-care costs to jump

WASHINGTON — Americans are likely to spend nearly twice as much on health care a decade from now, and the costs will shift from private insurance to Medicare as the baby boomer generation ages, federal analysts are reporting today.

The report by the Centers for Medicare and Medicaid Services (CMS) predicts that health-care spending will increase from just under one-sixth of the nation's economy last year to just over one-fifth by 2017. The report was published in today's Web edition of the journal Health Affairs.

The nation's health-care spending is expected to grow an average of 6.7 percent annually, from a total of $2.2 trillion last year to $4.3 trillion in 2017. That growth rate is expected to outpace the nation's economy by nearly 2 percent a year.

This trend means that "policymakers, insurers and the public collectively face some difficult decisions about the way health care is delivered and paid for," said Sean Keehan, an economist with CMS and one of the report's authors.

The largest factors causing the growth in health-care spending are expected to be higher prices for medical services and the increased use of medical care.

Although the aging of the baby boom generation will not have much effect on the total amount spent for health care, it will cause a significant shift in who pays the bills.

Consumers are expected to pay a slightly smaller share of total health-care costs out of their own pockets, while the share paid by private and public insurance will increase. And those insured costs will shift from private, employer-based insurance coverage to public Medicare coverage.

The report predicted that prescription drug spending per person is expected to more than double from $761 last year to $1,537 by 2016.

Likewise, the big shift will be from private to public insurance coverage. Individuals will continue paying for about 18 percent of drug costs, but the share covered by private insurance is expected to decline from about 41 percent to 33 percent, while the share covered by public program jumps from about 40 percent to 49 percent.

Kerry Weems, CMS's acting administrator, said the projection "reminds us that we need to accelerate our efforts to improve our health-care delivery system to make sure that Medicare and Medicaid are sustainable for future generations of beneficiaries and taxpayers."