U.S. Health Care Bill by 2015: $4 Trillion

Feb. 22, 2006 — -- Health care -- which now consumes about one in every six dollars spent in the United States -- will eat up one of every five dollars by 2015, according to a new government analysis.

The increase is due to longer life spans, breakthroughs in medical technology and rising incomes, according to a report from the Centers for Medicare and Medicaid Service.

Along with hitting taxpayers' wallets, the increasing cost of health care will burden the federal budget as more people -- mostly aging baby boomers -- become eligible for coverage through Medicare (the federal health program for the elderly) and Medicaid, which covers people with low incomes.

That means that by the end of the next decade, the government will be paying about half of the nation's medical costs.

"We anticipate that society will again need to confront the underlying question about supply and demand for health care services," stated the report.

The report estimated that both government and private spending for health care will average about $12,320 per person in 2015, almost double the 2005 figure of $6,683. Or, put another way, the nation's health care bill could total more than $4 trillion.

Total health spending is projected to rise at an annual rate of 7.2 percent over the next 10 years, more than two percentage points faster than the projected growth of the U.S. economy.

But out-of-pocket spending -- the amount not covered by private or government insurance -- as a share of that total is actually expected to fall from 15.1 percent in 2004 to 12.6 percent in 2015.

Rising incomes play a central role in rising health costs, said John Poisal, a statistician for the Centers for Medicare and Medicaid Services, which is part of the Health and Human Services Department.

As people make more money, they're willing to spend more to stay healthy. That, in turn, spurs research and development of new, costly medical technologies and medications, Poisal said.

But an economist said that rising health care costs, coupled with a move by private insurers to pass on more costs to consumers, could mean that the working poor will be unable to afford health care.

"When spending on health care goes up faster than earnings ... people are priced out of the health insurance market," said Paul Ginsburg, president of the nonpartisan Center for Studying Health System Change.