According to a report by the Centers for Medicare and Medicaid Services (CMS), health care spending is going up.
In a recent article, Medpage Today and ABC News reported that healthcare spending will grow at an average annual rate of 6.3% over the next decade.
For example, over the ten-year period of 2009-2019, spending on private health insurance will grow from $810B to $1467B per year, an increase of 81% over the ten year period. Employer-sponsored private insurance spending will grow a little less, from $770B to $1240B, over the same time period. Public spending (including Medicare, Medicaid, and the new Children’s Health Insurance Plan) will increase from $1203B to $2339B. That 94% increase includes both expanded coverage, as well as decreased Medicare payments to physicians (a cut that many believe won’t hold).
By 2019, the study estimates that nearly 20% of the U.S. gross domestic product (GDP) will be spent on healthcare costs. That’s one in every five dollars.
Are you surprised?
I’m not. In fact, I think the estimates by CMS may be low. It’s not unusual for a family to spend 20% of their disposable income on healthcare insurance alone today. Take a family of four, with an annual income of $80,000. After taxes they might take home $64,000. A non-subsidized private insurance policy could easily run $1000 per month, or nearly 20% of their disposable income.
Did you ever expect that you’d spend more on healthcare insurance than food, or housing, or even (gulp) taxes?
Photo by Steve Jurvetson