Medicare Compliance & Reimbursement

By 2017, U.S. health care spending is expected to nearly double, reaching $4.3 trillion and consuming 19.5 percent of the nation's gross domestic product (GDP), according to a federal analysts' report in an article published in Health Affairs.

"Health care is expected to consume an expanding share of the U.S. economy over the next decade, meaning policymakers, insurers and the public collectively face some difficult decisions about the way health care is delivered and paid for," said Centers for Medicare and Medicaid Services (CMS) economist Sean Keehan, one of the authors of the government's annual health care projection report. "With the implementation of the Medicare Part D benefit behind us, a focal point of the next ten years will be the impending movement of the baby-boom generation into Medicare."

By 2017, CMS spending is expected to account for $884 billion, or just over one-fifth of all national health spending.

Medicaid spending, for the next decade, is expected to grow at an average of 7.9 percent per year, reaching $717.3 billion, or 16.8 percent of national health spending, by 2017.

The CMS analysts project that drug spending will accelerate through 2017, reaching almost $515.7 billion. Increases in prescription drug use are expected to drive the increase in drug spending over the next decade. Medicare Part D's implementation in 2006 is expected to have very little impact on overall health spending growth through 2017, as per capita spending for Medicare beneficiaries is assumed to remain identical to that of the rest of the population, according to the authors.

By 2017, hospital spending will reach more than $1.3 trillion. Hospital spending growth is expected to slow to 6.4 percent by 2017, as growth in the projected demand for hospital services slows in response to expected slower growth in income.

Other highlights from the report include:

Out-of-pocket spending. Growth in out-of-pocket payments is projected to gradually accelerate to 6.0 percent and reach $464.3 billion by 2017. The analysts cite the expectation that employers and insurers will shift more health care costs to their covered populations through benefit buy-downs and increased cost sharing in response to slower projected economic growth.

Private health insurance. The CMS analysts project that premium growth will increase to 6.9 percent by 2009 but will again slow to 5.9 percent by 2017. These trends are driven by expected growth in private health insurance benefits, as well as by cyclical fluctuations in insurers' profit margins and administrative costs.

Physician services. For the next decade, growth in physician spending is expected to average 5.9 percent per year, down from 6.6 percent in the past eleven years.