HERITAGE: “Yesterday, the Centers for Medicare and Medicaid Services (CMS) released its new projections of national health spending trends through 2020. The findings, which estimate health care spending to reach more than $4 trillion by 2020, come as no surprise: Runaway spending has overtaken the United States health care system and is on the rise. More notably, the study confirms Obamacare does not “bend the cost curve” but only increases government’s share of spending in the health care system instead.
Already, the White House has tried to spin the report as a victory for its health care legislation. Writing for the White House Blog, White House Deputy Chief of Staff Nancy-Ann DeParle touted the all-time low growth rates of the past two years. Indeed, in 2010, health care spending remained an unchanged (yet still breathtakingly large) 17.6 percent of gross domestic product (GDP). In dollars, the nation was estimated to have spent $2.6 trillion, growing by a new historic low of 3.9 percent from the previous year. But as the authors explain, the reason for decelerated spending was the economic downturn and the impact high unemployment had on reducing private coverage—nothing to cheer about. Reduced payments to private plans under Medicare Advantage also contributed to a decrease in Medicare spending.
As the economy recovers and the major provisions of Obamacare kick in, national health spending is projected to grow at quite a clip—increasing, on average, 5.8 percent each year. By 2020, the nation will spend $4.54 trillion on health care, or close to 20 percent of GDP. (For the sake of comparison: In 2010, federal tax revenue totaled 14.9 percent of GDP, and all federal spending combined amounted to 23.8 percent of GDP.) |
