Health-care sector grew as economy contracted in 2009

February 4, 2010

Washington Post

David Brown

Health-care spending in the United States grew last year despite a contracting economy, amounting to 17.3 percent of the gross domestic product, according to estimates released Wednesday.

The health-care sector's share of the economy grew 1.1 percent in 2009 compared with 2008, the largest one-year increase since at least 1960.

Spending growth by federal, state and local governments was 8.7 percent last year, nearly three times the rate for employers, insurance companies and individuals -- 3 percent.

By the end of this decade, in 2019, health-care spending will be $2 trillion higher than it is now, it will represent 19.3 percent of the economy, and the government will pay 52 percent of it, according to the report released by the Centers for Medicare and Medicaid Services, which is part of the Department of Health and Human Services.

The principal author of the report declined to say whether the increased spending was a welcome sign in an important sector of the economy or a recipe for fiscal disaster.

"It is sort of hard for us, from where we sit, to weigh in on that," said Christopher J. Truffer of the Medicare-Medicaid agency. "What we can say is that health spending is not only growing but it is growing faster than it was in 2008."

Government spending outpaced private spending last year because lots of people enrolled in Medicare, the government health-insurance program for the elderly, at the same time that many lost private insurance because of the recession.

Some parts of legislation now before Congress (such as incentives for computerized medical records and investment in research comparing treatments) may alter the growth curve of health-care spending in the next few decades. The projections for the rest of this decade did not account for the possible effects of reform, the authors said.

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