Friday, February 5, 2010

Health's GDP share makes biggest jump ever - MarketWatch

Health's GDP share makes biggest jump ever - MarketWatch

LOS ANGELES (MarketWatch) -- The economy may be struggling but spending on health care is showing no signs of slowing down, according to a study released early Thursday.

The Centers for Medicare and Medicaid Services is estimating that the sector's share of gross domestic product made its biggest one-year jump ever, going to 17.3% in 2009 from 16.2% in 2008.

CMS also figures that health-care spending rose 5.7% to $2.5 trillion last year, even though GDP dipped by 1.3%. And the agency says public insurers like Medicare and Medicaid will spend the majority of U.S. health-care dollars by 2012, about four years earlier than expected.

These findings were to publish in Thursday's editions of Health Affairs magazine. CMS officials say that while there seems to be a disconnect between GDP and what's happening with health-care spending, it is the struggling economy that is responsible for the estimates, said Christopher Truffer, a CMS actuary and one of the authors of the study.

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Health-care spending is expected to grow by 6.1% on average this decade. By 2019, health-care spending is expected to double to $4.5 trillion, and it will comprise 19.3% of GDP, nearly one-fifth of the economy. The study's estimates are not final numbers, Truffer said.

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Truffer said the most surprising finding in the study was that public spending will overtake private spending by 2012 and comprise the majority of health-care dollars. That wasn't expected to happen until 2016.

But it's also the by-product of a troubled economy, as fewer people are employed and thus getting insurance through their jobs, he said ...

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