Government report projects continued escalation of health costs

A new report from the federal Department of Health and Human Services concludes that health costs will exceed $8,000 per person this year (Source: “Health costs top $8,000 a person,” Columbus Dispatch/AP, Feb. 24, 2009).

The report, which was published in the journal Health Affairs, also predicts that six million Americans will lose their private health coverage by the end of the year, meaning that Medicaid rolls are expected to expand considerably. The government also is faced with a shrinking Medicare trust fund, which could become insolvent as early as 2016, according to the report.  Because of increased Medicaid enrollment and the large number of baby boomers who are beginning to become eligible for Medicare, public payers will become the largest funders of health expenses by 2016 and tax payers will be responsible for more than half of all health costs by 2018, the report concludes.

The report projects an annual growth rate in national health spending of 6.2 percent between 2008 and 2018, 2.1 percentage points faster than the average annual growth of GDP. If that projection is correct, the health share of GDP would rise from 16.2 percent in 2007 to 20.3 percent by 2018.

"Health care costs are crushing middle class families and the small businesses that fuel job growth in this country," said White House spokesman Reid Cherlin. "President Obama believes that if we're going to get our economy back on track, we have to act quickly to address this pressing issue."