Report: Feds to pay more than half of health costs

Feb 04, 2010 By RICARDO ALONSO-ZALDIVAR , Associated Press Writer

(AP) -- For all the hue and cry over a government takeover of health care, it's happening anyway.

Federal and state programs will pay slightly more than half the tab for purchased in the United States by 2012, says a report by Medicare number crunchers released Thursday.

That's even if President Barack Obama's health care overhaul wastes away in congressional limbo. Long in coming, the shift to a health care sector dominated by government is being speeded up by the deep and the aging of the , millions of whom will soon start signing up for Medicare.

"This does mark a pretty stark jump in the data," said Christopher Truffer of Medicare's Office of the Actuary, which prepared the analysis published in the .

The tipping point is likely to come next year, Truffer said. For technical reasons, the report assumes that Congress is going to allow Medicare to cut doctor fees by 20 percent later this year, as required by a 1990s budget law. But lawmakers have routinely waived such cuts, and they're not likely to allow them in an election year. So government probably will end up picking up most of the nation's medical costs in 2011, instead of 2012.

The report serves as a reality check in the debate over Obama's health care plan, which has been dominated by disagreements over how large a role government should play.

Congressional Democrats want to move forward with the sweeping legislation despite the loss of a Massachusetts Senate seat that cost them undisputed control of the legislative agenda. Republicans have rejected Obama's approach as a top-down, big government solution.

Richard Foster, Medicare's top economic forecaster, said the recession has only worsened the two stubborn problems facing the U.S. health care system, lack of insurance coverage and high costs. "All that argues that some form of is a good idea," Foster said.

The Democrats' plan would expand coverage to more than 30 million people now uninsured, while taking some modest steps to slow the pace of future cost increases. It would set up a new insurance marketplace for small businesses and people buying coverage on their own, with government subsidies available for many. Denial of coverage because of health problems would be prohibited.

The report estimated that in 2009, the United States spent $2.5 trillion for health care, with government programs - mainly Medicare and Medicaid - paying $1.2 trillion. Employer health insurance and various private sources covered the other $1.3 trillion. Even as the economy shrank because of the downturn, health care spending grew by 5.7 percent from 2008. Spending by government grew nearly three times faster than private spending, closing in to overtake it.

Driving much of the surge was Medicaid, the federal-state program for low-income people, which grew by nearly 10 percent as workers lost jobs with health insurance, and Democrats expanded coverage for children of the working poor.

The swine flu outbreak contributed modestly to higher costs in 2009, as more people went to the doctor and took antiviral medications, the report found. Total spending on prescription drugs grew by slightly more than 5 percent, as higher prices for brand name medications overpowered the widespread availability of generics.

Previous estimates had put the crossover point to a health care system financed mainly by taxpayers at about 2016. There seems to be little chance that the balance will tip back decisively in the direction of private financing, with the Baby Boom generation signing up for Medicare and the lack of health insurance at many new jobs.

Other economically advanced countries - including those with government-run health care - also have problems with costs. But the U.S. spends much more per person than any other nation, without getting better results in life expectancy and many other measures of health.

Explore further: Oil-swishing craze: Snake oil or all-purpose remedy?

5 /5 (1 vote)
add to favorites email to friend print save as pdf

Related Stories

Sources: Senators weigh 3 government health plans

May 09, 2009

(AP) -- Senators are considering three different designs for a new government health insurance plan that middle-income Americans could buy into for the first time, congressional officials said Friday. Officials ...

Health insurance from Uncle Sam gets a look

May 14, 2009

(AP) -- Look out Aetna, Humana and UnitedHealthcare. Senators are meeting behind closed doors to consider whether the federal government should jump into the health insurance business.

Kennedy bill would make employers provide care

Jun 06, 2009

(AP) -- Employers would be required to offer health care to employees or pay a penalty - and all Americans would be guaranteed health insurance - under a draft bill circulated Friday by Sen. Edward M. Kennedy's ...

Recommended for you

Suddenly health insurance is not for sale

Apr 18, 2014

(HealthDay)— Darlene Tucker, an independent insurance broker in Scotts Hill, Tenn., says health insurers in her area aren't selling policies year-round anymore.

Study: Half of jailed NYC youths have brain injury (Update)

Apr 18, 2014

About half of all 16- to 18-year-olds coming into New York City's jails say they had a traumatic brain injury before being incarcerated, most caused by assaults, according to a new study that's the latest in a growing body ...

Autonomy and relationships among 'good life' goals

Apr 18, 2014

Young adults with Down syndrome have a strong desire to be self-sufficient by living independently and having a job, according to a study into the meaning of wellbeing among young people affected by the disorder.

User comments : 4

Adjust slider to filter visible comments by rank

Display comments: newest first

Rick69
5 / 5 (1) Feb 04, 2010
The Federal government does NOT pay for anything! They collect money through medicare taxes and then pass it along, or they run up deficits if they don't have enough cash. People need to get over the concept that government pays for anything. They just take citizens money and transfer to others.
Caliban
1 / 5 (2) Feb 04, 2010
Right, So what happens when you turn 65, someone higher up the food chain harvests your 401K, and you can't afford your BC/BS plan on your Social Security income and part time job as a greeter at WalMart? Medicare won't seem like such a ripoff then, I bet.
Caliban
1 / 5 (1) Feb 04, 2010
Right. So what happens when you turn 65, someone higher up the food chain harvests your 401k, and you cant afford your BC/BS premiums on your Social Security Income and part-time greeter job at WalMart? Medicare won't seem like such a ripoff then, I bet.
Caliban
1 / 5 (1) Feb 04, 2010
Sorry for the double post- first one didn't load in a timely manner.

More news stories

Filipino tests negative for Middle East virus

A Filipino nurse who tested positive for the Middle East virus has been found free of infection in a subsequent examination after he returned home, Philippine health officials said Saturday.

Study says we're over the hill at 24

(Medical Xpress)—It's a hard pill to swallow, but if you're over 24 years of age you've already reached your peak in terms of your cognitive motor performance, according to a new Simon Fraser University study.

NASA's space station Robonaut finally getting legs

Robonaut, the first out-of-this-world humanoid, is finally getting its space legs. For three years, Robonaut has had to manage from the waist up. This new pair of legs means the experimental robot—now stuck ...

Ex-Apple chief plans mobile phone for India

Former Apple chief executive John Sculley, whose marketing skills helped bring the personal computer to desktops worldwide, says he plans to launch a mobile phone in India to exploit its still largely untapped ...

Egypt archaeologists find ancient writer's tomb

Egypt's minister of antiquities says a team of Spanish archaeologists has discovered two tombs in the southern part of the country, one of them belonging to a writer and containing a trove of artifacts including reed pens ...

Airbnb rental site raises $450 mn

Online lodging listings website Airbnb inked a $450 million funding deal with investors led by TPG, a source close to the matter said Friday.