Healthcare Spending to be 20% of GDP by 2017

The Centers for Medicare and Medicaid Services is projecting that spending on healthcare will rise steadily over the next decade to $4.3 trillion, or 19.5 percent of the nation’s gross domestic product from 16.6 percent this year.

The agency reports that healthcare spending over the next decade will grow annually by nearly 2 percent more than the annual 4.9 percent growth rate of the overall economy.

The CMS estimates spending in the hospital care segment will reach $1.3 trillion by 2017, from $747 billion in 2008. However, the 7.5 percent annual growth rate for hospital care spending in 2008 will decrease slightly to 6.4 percent by 2017 due to a slowdown in the demand for hospital services.

Conversely, the demand for prescription drugs and home health care services will increase. The CMS said the nation will spend $119 billion on home health care services by 2017, up from $62 billion this year.  Meanwhile, spending on prescription drugs is projected to more than double, reaching nearly $516 billion in 2017, from $247 billion in 2008.

The CMS’ Office of the Actuary prepared the analysis and published it last week in the online journal Health Affairs.  Kerry Weems, CMS’s acting administrator, said in a press release that the projections are a reminder that the country needs to accelerate efforts to improve the health care delivery system to make sure Medicare and Medicaid are sustainable for future generations.