Health Costs to Hit 20% of U.S. Spending by '20: Study

U.S. health costs will account for 19.8 percent of the nation's spending by 2020, up from 17.6 percent in 2009, with the government paying a bigger portion of the bill, researchers said on Thursday.

The report, published online in the journal Health Affairs, looked at projected U.S. health spending through 2020. The researchers estimated the government's share of health spending will increase from 45 percent today to 49 percent by 2020.

The increase is partly due to a percentage of the 30 million people gaining health insurance through President Barack Obama's healthcare overhaul joining government programs.

According to the report, the average annual growth in national health spending is expected to be 5.8 percent, or 0.1 percentage point higher than it would be without the Affordable Care Act, outpacing annual GDP growth.

"We are projecting a decline in the out-of-pocket share 1/8for consumers 3/8, but that doesn't mean that the consumer's burden is going to be substantially reduced," said Sean Keehan, an economist at the government's Centers for Medicare and Medicaid Services (CMS) and co-author of the report. "Especially since we're projecting health spending to grow at a faster rate than economic growth and disposable personal incomes."

For 2010, the researchers estimated health spending grew at a historically low rate of 3.9 percent to $2.6 trillion. They attributed this to a weak economy that has led many consumers to delay medical treatment.

Future spending will likely grow at a faster pace, fueling concerns over how to cut the country's deficit, now the subject of fierce debate among lawmakers ahead of a deadline for raising the government's borrowing limit.

The largest increase in healthcare spending in a single year is expected in 2014, when CMS forecasts a rise of 8.3 percent as much of the new U.S. health law is implemented. The law's provisions include introducing state-based insurance exchanges and increased access to the government's Medicaid insurance plan for the poor.

The report estimated spending growth will average 6.2 percent annually from 2015 through 2020.

According to the report, some large employers with low-wage employees are expected to stop offering health insurance in 2014. An estimated 13 million employees will then likely seek insurance in the new exchanges or by enrolling in Medicaid, according to Rick Foster, CMS's chief actuary.

Increased access to health insurance is another explanation for the high growth rate, because with access comes demand.

The researchers estimated that doctor visits, clinical services and prescription drugs will be some of the largest growth areas, because of the comparably young age of the newly insured population. The report said younger patients tend to require less acute care.