By Covering Business March 15, 2012
The national outlay for health care spending is projected to rise significantly over the next twenty years as the Baby Boomers grow older and require more medical care. That jump is projected to place unprecedented strains on the economy.
In January, Linda Bilheimer, the assistant director for Health and Human Resources at the Congressional Budget Office, delivered a presentation to the Heritage Foundation on the economic consequences of skyrocketing medical costs. Among her talking points:
• In 2011, federal spending accounted for nearly 25% of GDP, a record high. About one third of those outlays came from deficit spending.
• Health care spending as a percentage of GDP climbed to about 17% in 2009. The CBO projects it will reach about 26% by 2035.
• In 2008, tax expenditures for health care cost the country $288 billion, most of which came from the exclusion of employer-sponsored health care plans.
• States facing budget shortfalls may have to scale back Medicaid spending over the next several years. Strategies could include cutting payments to health care providers, scaling back benefits and changing prescription drug coverage policies.
• The average annual increase in family health insurance premiums jumped to 9% in 2011, the biggest increase since a comparable gain in 2005.
Read the full report (PDF).