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Health Care Spending Continued Climb in 2009

February 5, 2010 at 12:00 AM EST
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Health care spending grew to 17 percent of the U.S. economy last year. Betty Ann Bowser examines the impact of the figures amid questions on the future of a legislative reform push.
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JIM LEHRER: That follows our health care update about new figures on the continuing rise in spending.

“NewsHour” correspondent Betty Ann Bowser reports.

DOCTOR: Let’s check your grip and you squeeze my hand. Whew! OK. That’s great.

BETTY ANN BOWSER: Health care spending devoured 17 percent of the entire economy last year, about $2.5 trillion. That’s the biggest one-year growth since record-keeping began in 1960, according to projections from the Federal Centers for Medicare and Medicaid Services, or CMS, this week.

Maryland small business owner Brian England feels the spiraling cost of health care every day.

BRIAN ENGLAND, British American Auto Care: I look at my expenses coming up and, last year, we were able to keep health care insurance down by 10 percent. This coming year, it’s probably going to be 20 percent or 30 percent. And I have run out of options.

BETTY ANN BOWSER: CMS also says that, by 2012, federal and state governments will pick up more than half of the tab for Americans’ health care. That’s because millions of recently unemployed Americans are applying for Medicaid and increasing numbers of aging baby boomers are signing up for Medicare.

Congressional scholar Thomas Mann of the Brookings Institution says the figures show, if the trend continues, health care spending could soon make up one-quarter of the U.S. economy.

THOMAS MANN, Brookings Institution: They are increasing at such a rate that they will otherwise absorb a huge percentage, if not the entire federal budget, and much of the national economy.

It’s just astounding, the relentless march of health care cost increases. And you ask yourself, for something that was 5 percent, 6 percent, 7 percent of the economy not too long ago, now 17 percent, soon, it will be 20 percent, and then 22 percent, and you begin to say, well, what else gets crowded out? Can we really dispose of so much else in our economy and have health care replace it and in our public budgets? I think not. We have to do something about it.

BETTY ANN BOWSER: What Democratic leaders want to do is pass a health care reform bill that would expand coverage to millions of Americans and place tighter restrictions on insurance companies.

Auto repair shop owner England says health care is the third biggest expense he has each month, behind salaries for his 18 employees and rent. And he’s all for Democrats passing their version of an overhaul.

BRIAN ENGLAND: We have got to move on, get these bills passed, so we can have health care for the millions of people that don’t have it. I think it’s despicable that we have 50 million people without health care insurance.

BETTY ANN BOWSER: But prospects for passing health care reform dimmed last month when Republican Scott Brown won the Massachusetts Senate seat held by the late Senator Edward Kennedy, who pushed for health care reform for decades. Brown won in part by promising to vote against health care reform. His victory also stripped the Democrats of their 60-vote filibuster-proof supermajority.

Democratic leaders have been negotiating behind the scenes about a way forward and insist they will pass something this year. But whatever they decide to do, they are already facing stiff opposition from a united Republican minority and from a number of large business trade associations.

JERI KUBICKI, National Association of Manufacturers: We would love for Congress to start over.

BETTY ANN BOWSER: Jeri Kubicki is the vice president of human resources policy at the National Association of Manufacturers, the world’s largest industrial trade organization, which opposes the Democratic bills.

JERI KUBICKI: It’s going to mean a huge tax increase to our members. It’s going to mean less jobs created. It’s going to mean more mandates and less flexibility to continue to offer the programs they offer today.

The reason we’re not supportive of the current bills is that they really don’t focus on — on reducing costs. They don’t focus on reducing costs for manufacturers. That’s our key concern. But they don’t focus on reducing costs for any consumer.

BETTY ANN BOWSER: There are other big stakeholders worried about skyrocketing costs. The health insurance industry opposed the Democrats’ plans, but favors reform in principle.

Robert Zirkelbach is spokesman for America’s Health Insurance Plans.

ROBERT ZIRKELBACH, America’s Health Insurance Plan: Unless there’s more of a look at the underlying costs of medical care, rather than simply focusing on the cost of health care coverage, we’re never going to be able to make health care coverage more affordable for people across the country.

There was very little in the legislation that would bend the cost curve. The legislation included some pilot projects in the Medicare program, which is an important first start. But, in order to really bend the cost curve and make health care coverage more affordable for families and small businesses, there needs to be a much broader look at what is driving the rate of increase in health care costs in this country.

BETTY ANN BOWSER: Millions of senior citizens are also opposed to the health care reform bills in their present form, because current Democratic proposals are paid for in part with cuts to future Medicare spending.

JIM MARTIN, 60 Plus Association: It’s stalled. And well it should be. I think, quite simply, to use an old military expression, we ought to deep-six it and start over.

BETTY ANN BOWSER: Jim Martin is chairman of 60 Plus, a senior citizens lobbying group that he says represents about five million members.

JIM MARTIN: You don’t take half-a-trillion dollars out of a system called Medicare, which we seniors have paid into for 45 years now. We have paid our dues. And we don’t think that’s the way to go. That’s got seniors not only angry, but it scares them.

BETTY ANN BOWSER: But John Rother, health care policy chief for the AARP, the largest organization representing senior citizens in the world, sharply disagrees.

JOHN ROTHER, AARP: Walking away is not an alternative, I don’t think, because the results would be disastrous.

BETTY ANN BOWSER: Rother, who has been involved in health care reform for 25 years, says the only way to bend the cost of health care downward is for the Congress to pass a comprehensive health care reform bill, most of it in its current form.

JOHN ROTHER: Well, I think just about anyone in health care would say that, over five years, without some effort to reform the system, we could have another 10 million uninsured. We could have health care costing so much that employers would drop benefits or scale back benefits.

We would have a Medicare system that would be on the verge of bankruptcy, and, therefore, leading to some pretty drastic benefit cuts in Medicare. And I think we would have an economy that would be — assuming that the economy could grow again, would be putting every dollar of that growth into a health care system that we know is inefficient, that we know doesn’t work as well as it could.

BETTY ANN BOWSER: The latest projections showing a spike in health care spending is sure to be used by both sides to bolster their arguments for and against health care reform. Meanwhile, Democrats say they plan to announce how they intend to proceed with legislation soon.