Gov’t expects rising health care inflation
WASHINGTON — The nation’s respite from troublesome health care inflation is ending, the government said Wednesday in a report that renews a crucial budget challenge for lawmakers, taxpayers, businesses and patients.
Economic recovery, an aging society, and more people insured under the new health care law are driving the long-term trend.
Projections by nonpartisan experts with the Health and Human Services department indicate the pace of health care spending will pick up starting this year. The introduction of expensive new drugs for the hepatitis C also contributes to the speed-up in the short run.
The report from the Office of the Actuary projects spending will grow an average of 6 percent a year from 2015-2023. That’s a notable acceleration after five consecutive years, through 2013, of annual growth below 4 percent.
Although the coming bout of health-cost inflation is not expected to be as aggressive as in the 1980s and ‘90s, it will still pose a dilemma for President Barack Obama’s successor. Long term, much of the growth comes from Medicare and Medicaid, two giant government programs now covering more than 100 million people.
The United States is expected to spend more than $3 trillion on health care this year. Yet Americans are not appreciably healthier, and much of what they spend appears to go for tests and treatments of questionable value. Fraud also siphons off billions of dollars a year.
Because health care spending is so high, shifts of a couple of percentage points have significant economic consequences. Health care inflation has recently been in line with overall economic growth, keeping things manageable.
As spending rebounds, health care again will start consuming a growing share of the economic pie, crowding out other priorities. From 17.2 percent of the economy in 2012, health care is expected to grow to a 19.3 percent share by 2023, the report said.