From the Office of the Actuary, Centers for Medicare and Medicaid Services
Health Affairs
February 4, 2010

Projections for 2010:

National Health Expenditures (NHE): $2,569.6 billion

NHE per capita: $8,289.9

NHE as percent of GDP: 17.3%

NHE projected average annual growth, 2009-2019: 6.1%

Abstract:

The economic recession and rising unemployment—plus changing demographics and baby boomers aging into Medicare—are among the factors expected to influence health spending during 2009–2019. In 2009 the health share of gross domestic product (GDP) is expected to have increased 1.1 percentage points to 17.3 percent—the largest single-year increase since 1960. Average public spending growth rates for hospital, physician and clinical services, and prescription drugs are expected to exceed private spending growth in the first four years of the projections. As a result, public spending is projected to account for more than half of all U.S. health care spending by 2012.

http://content.healthaffairs.org/cgi/content/full/hlthaff.2009.1074v1

Woolhandler and Himmelstein: Paying For National Health Insurance — And Not Getting It (Health Affairs, July/August 2002):
https://pnhp.org/publications/payingnotgetting.pdf

Comment: 

By Don McCanne, MD

Same story every year. Health care spending continues to increase at rates well in excess of inflation, and health care continues to represent an increasing percentage of our gross domestic product.

One important technical point. The CMS authors report that public spending will soon account for more than half of all U.S. health care spending. But they leave out two important taxpayer sources of health care financing: 1) tax subsidies in the form of tax deductions for employer-sponsored plans, and 2) the purchase of health benefit programs for public employees. In their classic paper (link above), Woolhandler and Himmelstein demonstrated that this results in a figure of government spending about fifteen percentage points higher than the numbers reported in this annual CMS report.

Using a back-of-the-envelope update, the government is already using taxpayer funds to finance about two-thirds of our national health expenditures (NHE). In a financing system that only Americans would design, a significant portion of those funds, without much transparency, are funneled through to the inefficient, wasteful private insurance plans and recategorized as private spending.

Taxpayers should be outraged. We hold the stewards of our public funds to a higher standard for responsible spending than we do for those who are shuffling funds around in a market economy.

We should be receiving much greater value for our health care spending, but we won’t under the proposal before Congress. It has been designed to funnel even more taxpayer funds to the private insurance industry, with the guarantee that they can draw off for themselves fifteen to twenty percent of the funds they receive.

With that model of a financing system, we can anticipate that we will receive the same depressing report from CMS each year until finally our finances and our health are ruined by the imposition of the forces of Stein’s Law. With a single payer national health program – an improved Medicare for all – it doesn’t have to be that way.

Health Spending Projections Through 2019: The Recession’s Impact Continues

From the Office of the Actuary, Centers for Medicare and Medicaid Services
Health Affairs
February 4, 2010
Projections for 2010:
National Health Expenditures (NHE): $2,569.6 billion
NHE per capita: $8,289.9
NHE as percent of GDP: 17.3%
NHE projected average annual growth, 2009-2019: 6.1%
Abstract:
The economic recession and rising unemployment—plus changing demographics and baby boomers aging into Medicare—are among the factors expected to influence health spending during 2009–2019. In 2009 the health share of gross domestic product (GDP) is expected to have increased 1.1 percentage points to 17.3 percent—the largest single-year increase since 1960. Average public spending growth rates for hospital, physician and clinical services, and prescription drugs are expected to exceed private spending growth in the first four years of the projections. As a result, public spending is projected to account for more than half of all U.S. health care spending by 2012.
http://content.healthaffairs.org/cgi/content/full/hlthaff.2009.1074v1
Woolhandler and Himmelstein: Paying For National Health Insurance — And Not Getting It (Health Affairs, July/August 2002):
https://pnhp.org/publications/payingnotgetting.pdf

Same story every year. Health care spending continues to increase at rates well in excess of inflation, and health care continues to represent an increasing percentage of our gross domestic product.
One important technical point. The CMS authors report that public spending will soon account for more than half of all U.S. health care spending. But they leave out two important taxpayer sources of health care financing: 1) tax subsidies in the form of tax deductions for employer-sponsored plans, and 2) the purchase of health benefit programs for public employees. In their classic paper (link above), Woolhandler and Himmelstein demonstrated that this results in a figure of government spending about fifteen percentage points higher than the numbers reported in this annual CMS report.
Using a back-of-the-envelope update, the government is already using taxpayer funds to finance about two-thirds of our national health expenditures (NHE). In a financing system that only Americans would design, a significant portion of those funds, without much transparency, are funneled through to the inefficient, wasteful private insurance plans and recategorized as private spending.
Taxpayers should be outraged. We hold the stewards of our public funds to a higher standard for responsible spending than we do for those who are shuffling funds around in a market economy.
We should be receiving much greater value for our health care spending, but we won’t under the proposal before Congress. It has been designed to funnel even more taxpayer funds to the private insurance industry, with the guarantee that they can draw off for themselves fifteen to twenty percent of the funds they receive.
With that model of a financing system, we can anticipate that we will receive the same depressing report from CMS each year until finally our finances and our health are ruined by the imposition of the forces of Stein’s Law. With a single payer national health program – an improved Medicare for all – it doesn’t have to be that way.