Spending on health care to accelerate

Associated Press

WASHINGTON

The nation’s respite from accelerating health care costs appears to be over.

Spending on health care will outpace the nation’s overall economic growth over the next decade, the government forecast on Tuesday, underscoring a coming challenge for the next president, not to mention taxpayers, businesses and individual Americans.

A combination of expanded insurance coverage under President Barack Obama’s law, an aging population and rising demand will be squeezing society’s ability to pay.

By 2019, midway through the next president’s term, health care spending will be increasing at roughly 6 percent a year, compared with an average annual rise of 4 percent from 2008 through 2013.

The higher rate of increase is still “relatively modest,” says the report from the Office of the Actuary in the Health and Human Services Department. The forecast, through 2024, does not foresee a return to pre-recession days of torrid health care inflation, as the government and private employers try to revamp the way they pay hospitals and doctors to emphasize quality over quantity.

Even so, the report is “not great news,” said economist Douglas Holtz-Eakin, president of the American Action Forum, a center-right think tank.

“The main point is that the bill will continue to grow faster than the economy, which is what pays the bill,” he added. “The next president faces the task of reining in the growth of federal entitlement spending.”

“I do think this becomes something of a liability for anybody coming into office, and they need to have a very proactive policy to address it,” said Dan Mendelson, CEO of Avalere Health, a market analysis and consulting firm.