Health Costs Expected To Hit $4 Trillion in 2015

The amount the U.S. spends on health care will reach $4 trillion, or about 20 percent of gross domestic product in 2015, according to a report by the National Health Statistics Group, a division of the Centers for Medicare & Medicaid Services.

The NHSG report, a Health Affairs Web exclusive, further estimates that health care spending per capita will reach about $12,320 in 2015. In 2005, health care spending per capita was $6,683.

In addition, the report finds that private health insurance spending increased by 6.8 percent in 2005, compared to 8.4 percent in 2004; hospital spending will double by 2015; and home health spending, about $49 billion in 2005, will increase to $103.7 billion in 2015. Prescription drug spending is expected to reach $446 billion in 2015. It was $188 billion in 2004.

These daunting statistics represent a challenge to policymakers. In its coverage, the Los Angeles Times says the Bush administration response is inadequate. The Times led its Feb. 22 story with “Health care will account for 1 in 5 dollars spent in the United States by 2015, and health savings accounts are unlikely to help much in containing costs. . . .”

HSAs are a big part of the administration’s health reform package. By allowing participants to save money tax-free for health expenses, it is hoped that they will encourage enrollment in consumer-directed health plans. But, as the Times reports, so far only about 3 million Americans, or less than 2 percent of those in private health plans, are in plans that include HSAs.

Sheila Smith, an economist and coauthor of the Health Affairs report, tells the newspaper that “Given the small number of people affected, we don’t expect the effect to be huge.”

NHSG Deputy Director John Poisal tells Long Island Newsday that “We don’t expect HSAs to proliferate so dramatically that we would have an impact similar to that of the managed care era of the ’90s.”

Our most popular topics on