Government Health Care Spending Outpaces Private Sector Expenditures
U.S. government agencies are carrying an increasingly large share of the nation's rapidly rising health care expenditures, with the growth in health care services' public funding outpacing increases in private sector health care spending, according to a study by the Center for Medicare & Medicaid Services (CMS) on health care cost growth over the next decade.
Overall, health care spending in the U.S. grew 7.5% in 2004, down from 7.7% in 2003, the report said. But private and public spending growth patterns appear to be diverging, researchers observed, with private health care expenditures falling from 8.6% in 2003 to 7.4% in 2004, and public health expenditures accelerating from 6.6% in 2003 to 7.6% in 2004.
Researchers attributed increased public costs in 2004 to Medicare spending growth, driven primarily by higher spending on physicians and other health care providers under Medicare Parts A and B. In contrast, they said, private spending decreased, largely as a result of slower growth in medical care utilization.
The study also noted that the gap between private and public sector health care expenditures is likely to widen as the new Medicare drug benefit takes effect. Medicare drug spending in 2006 is projected to constitute 28% of total drug spending, up from 2% in 2005, researchers said. By 2014, the report predicted, public expenditures will make up more than 49% of the health care market, up from the current 46%.
Private health insurance premiums will grow at a slower rate during the next decade, but will still exceed per capita disposable income by an average of 1.4% from 2004 to 2014, the study indicated. Premium growth per enrollee decreased from 9.9% in 2003 to 7.7% in 2004, due to a slowdown in underlying medical costs and a slight dip in the underwriting cycle. Researchers projected that private health insurance enrollment growth will be below population growth each year through 2014, as the rising cost of private health insurance places further strain on the current system of employer-sponsored coverage.
