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Health Care Costs to Rise Dramatically over Next Decade

U.S. health care spending is expected to increase dramatically over the next decade, from $2 trillion to over $4 trillion by 2016, according to a government report released Wednesday. NewsHour health correspondent Susan Dentzer explains the report.

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    A government report today estimated that spending appeared to slow slightly from 2005 to 2006, but the longer-range forecast is grim, indeed. Over the next decade, spending is expected to increase at more than double the rate of inflation, topping $4 trillion in 2016.

    The report came from the Centers for Medicare and Medicaid Services. And here to go through those numbers and their meanings is our health correspondent, Susan Dentzer.

    Now, when I say there was some good news a little bit about 2005, explain what that's all about.

  • SUSAN DENTZER, NewsHour Health Correspondent:

    Well, and you just emphasized the word "slightly," Jim, and that was appropriate. In 2005, health spending overall for the country grew at a 6.9 percent rate. And in 2006, it's estimated by CMS, it fell all the way to 6.8 percent, so a tenth of — basically a tenth of a percentage point.

    The important point, though, is the second one that you emphasized in that introduction, which is that, going forward, we're still expecting health spending overall in this country to grow by at least 7 percent or more per year, which is a recipe for health spending doubling over the course of a decade.

    And that's exactly what the report predicted, that by 2016 we'd be at more than $4 trillion in spending versus just over $2 trillion now.


    And that, of course, is much higher than the expected inflation rate, so everything — in other words, everything is continuing pretty much the way it's been going for years now, right?


    Well, a lot better situation than was the case at the turn of the decade, when we were really seeing health spending going up, in some instances, in double digits rates, and also, in particular, aspects of it, like prescription drug spending, soaring forward at 18 percent a year.

    The situation is a lot better now, but a 7 percent steady compound growth rate for a huge sector of the economy is still a big deal, and that's still what we're facing.