US Health Care Spending to Double to $4.1 Trillion by 2016 - 20 Cents of Every 5 Dollars Spent

U.S. health care costs are set to double over the next 10 years to $4.1 trillion annually, or 1 dollar of every 5 dollars spent, according to a study by Centers for Medicare & Medicaid Services, published today in the Web edition of the journal Health Affairs.

The study estimates health spending in 2006 at $2.1 trillion or 16 cents of every dollar spent in the U.S. economy (16% of the GDP). The new estimate is based on a 6.9% average annual growth rate in health-care spending.  

Other Highlights:

  • Medicaid spending is expected to reach $313.5 billion in 2006, about the same as in 2005. 
  • With the addition of Part D, total Medicare spending growth is expected to reach $417.6 billion in 2006, up from $342 billion the year before. 
  • By 2016, Medicare spending is expected to more than double, reaching $862.7 billion.
  • U.S. prescription drug spending should reach $497.5 billion by 2016, more than double the expected level for 2006. 
  • Prescription drug spending will grow at an average annual rate of 8.6 percent until 2016.
  • The cost of hospital care is expected to climb to more than $1.2 trillion by 2016, vs. $651.8 billion expected for 2006. 
  • In 2006, consumers are expected to spend $250.6 billion in out-of-pocket health-care costs. The total spent will reach $440.8 billion by 2016, however. 
  • In 2006, an individual is projected to spend $846.50 on health care. In 2016, the average spent will be $1,405.73. 
  • Private health insurance premiums are expected to grow 4.4 percent in 2006, down from a high of 11 percent in 2002.
  • Growth in total physician and clinical spending is expected to slow from 7 percent in 2005, to 6.1 percent in 2006.
  • Growth in nursing home spending is also expected to slow, from 6 percent in 2005 to 3.4 percent in 2006 
  • Home health spending is likely to rise 1.4 percentage points to 12.5 percent in 2006, or $53.4 billion. This would make it the fastest growing area of health care.

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