US health spending: $3.1 trillion a year and growing

Yet, it took nearly two decades for his ideas to come to fruition: On July 30, 1965, President Lyndon B. Johnson signed the Social Security Amendments into law, establishing Medicare and Medicaid.

To shore up Medicare’s finances, Congress is considering a variety of proposals, including raising the eligibility age to 67; increasing premiums for the wealthy; negotiating prescription drug costs; streamlining care for “dual eligibles” (those qualifying for both Medicare/Medicaid coverage); cracking down on Medicare fraud; and increasing the role of private insurance.

Health-care spending will easily outpace the nation’s overall economic growth in the next decade, according to a report by government officials published Tuesday in the journal Health Affairs.

Prior to 2014, healthcare spending rates were running around 4 percent per year as the weak economy made people cut back on medical care that they could not afford.

Together the programs provide health coverage for 31% of Americans. Today, Medicare serves more than 52 million elderly and disabled Americans every year. But it will pick up again to an average of 5.8% a year between 2014 and 2024 due, in part, to the improving economy and the aging of the population, with approximately 19.1 million people expected to enroll in Medicare over the next 11 years.

Sean Keehan, a federal health economist and lead author of the article, said changes in cost-sharing between workers and employers as well as more price transparency would continue to slow price and spending increases. HealthChoices provides health care coverage to more Pennsylvanians than ever before, including many who previously didn’t qualify for traditional Medicaid plans. His program is also highly controversial and may well prove to economically hazardous. But the program is projected to have grown by 12 percent in 2014, again boosted by coverage expansion under the health care law. Previous research has shown that people who say they are in fair or poor health have markedly higher death rates, he explained. On the other hand, more Medicare spending on that older population will result in an inflow of resources into the state.

Skeptics of the administration, however, are concerned about whether the prevalence of private plans will compromise medical care for individuals, and only benefit the government by saving money. Almost 9 in 10 Americans say that though there are competing spending priorities in Congress, we should increase spending on Medicare or keep it about the same. It might also be okay if the U.S. consumer, dollar for dollar, got more out of money spent on health care than folks in other countries.

From 2016 to 2018, CMS projects annual health spending increases of 5.3 percent per year, which will increase 6.2 percent per year from 2019 to 2024.