U.S. Health Spending Growth Falls To 7.5%

By Matt Brady

February 23, 2005 at 07:00 PM

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Health care costs may eat up 18.7% of U.S. gross domestic product in 2014.[@@]

The Centers for Medicare and Medicaid Services included that forecast today in a report on national health care spending.

The spending growth rate actually fell to 7.5% in 2004, from 7.7% in 2003, CMS officials estimate.

But the $1.8 trillion total amounted to 15.4% of GDP in 2004, up from 15.3% of GDP in 2003, according to CMS officials.

Total national health care spending may increase only about 7.1% per year over the next decade, but the new Medicare prescription drug program could force the government to pick up a much bigger portion of the tab, the officials predict.

"The implementation of the Part D benefit has very little impact on overall health spending or total prescription drug spending, but it has a significant impact on who is paying for prescription drugs," says Stephen Heffler, the lead author of the study and director of the CMS National Health Statistics group.

Eugene Steurle, senior fellow at the Urban Institute, Washington, argued that the country has to avoid giving the government too much control over the health care system.

Non-government organizations are better equipped to take a long-term, innovative approach to identifying individuals' needs, Steurle says.

"We have to find a way to balance the system," Steurle says. "We have to have some market out there."

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