US government paying ever more health costs - report

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Within a decade, the public sector will be paying nearly half the cost of U.S. health care, which is also swallowing an ever-larger chunk of the nation’s resources, government economists reported on Wednesday.

The new Medicare drug benefit for seniors—which has alarmed lawmakers with its rising cost projections—is contributing to the shift toward more public funding, said the report by the Centers for Medicare and Medicaid Services, part of the U.S. Department of Health and Human Services.

Overall, health spending is seen hitting a record 18.7 percent of U.S. gross domestic product by 2014, up from 15.4 percent in 2004, according to the annual projection of future U.S. health spending.

The public sector’s share of these health care costs will reach 49.4 percent by 2014, up from 45.7 percent in 2004, the report said. This includes spending on Medicare, the government health insurance plan for the elderly, as well as federal, state and local spending on the Medicaid program for the poor.

But experts who spoke at a press conference releasing the report said they did not think it suggested the United States was heading for a system of entirely government-financed care.

“It’s unlikely that we are going to move in that direction. Americans seem more comfortable with cobbling together the kinds of health care insurance that we have,” said Marilyn Moon, vice president and director of the health program at the American Institutes for Research, a nonprofit behavioral and social science research organization.

However, the experts said public policy-makers had to debate the impact of health care costs on government finances—a debate that has been joined on Capitol Hill with recent projections that the new Medicare drug benefit will cost the government $724 billion over a decade.

Health care costs appear “destined to grow forever faster than anything else in this economy ... We haven’t faced up to it,” said Eugene Steurle, a senior fellow at the Urban Institute, a nonpartisan economic and social research group.

While the new Medicare drug benefit adds to the shift toward public sector spending on health, it is anticipated that it will only have a minor impact on overall health spending, the document said.

“The new Medicare benefits are not projected to significantly increase medical cost growth,” Mark McClellan, the Centers for Medicare and Medicaid Services administrator, said in a statement with the report.

Some lawmakers have urged Congress to reduce the costs of the Medicare drug benefit law by granting the government power to negotiate drug prices directly with pharmaceutical companies.

Others lawmakers want legislation that would allow Americans to buy cheaper drugs from Canada.

President George W. Bush has said he would veto any legislation attempting to take away Medicare’s drug coverage for seniors. 

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