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Healthcare spending in the United States is projected to reach $2.8 trillion in 2011, up from $1.3 trillion in 2000.
Healthcare spending in the United States is projected to reach $2.8 trillion in 2011, up from $1.3 trillion in 2000, according to a report by the Centers for Medicare & Medicaid Services. The CMS report projects that for the entire 2001-2011 period, health spending will grow at an average annual rate of 7.3%.
As a percentage of gross domestic product, healthcare spending is expected to reach 17% in 2011, up from 13.2% in 2000. The bulk of this increase comes in the first two years of the projection period, due in large part to expectations of continued slow economic growth.
Healthcare spending is expected to grow by 9.6% in 2001, a marked acceleration from the 6.9% growth in 2000, the last year for which there is historical data. A year ago, growth for 2001 had been projected to be 8.6%. The revised projection largely reflects one-time increases in expenditures for Medicare due to recent legislation and faster Medicaid growth.
Private spending for healthcare is expected to grow 8.9% in 2001 and peak at 9.4% for 2002, compared with 6.9% in 2000. This acceleration reflects the lagged effect of recent rising household incomes, a shift to less restrictive forms of managed care and rising price inflation due to the weaker influence of selective contracting.
For 2002-2011, public health spending is anticipated to grow at an average annual rate of 7.3%. Following an initial sharp acceleration in 2001, Medicare and Medicaid spending are expected to moderate greatly. By 2003, annual Medicare spending growth is expected to fall 5.5 percentage points to 4%, and annual Medicaid spending growth is expected to fall 3.5 percentage points to 7.8%.
Out-of-pocket costs are projected to fall to 14.1% of total personal healthcare spending in 2011, down from 14.8% in 2001. As employers continue to shift costs to employees and the uninsured population rises, these declines are expected to be much slower than those experienced during the 1990s.
The growth in prescription drug spending is projected to decelerate from 17.3% in 2000 to 10.1% for 2011. However, prescription drugs will still remain the fastest-growing health sector, nearly doubling its share of healthcare spending during this period.
Reasons for this projected deceleration include weaker disposable income from a slowing economy, declining impact of direct-to-consumer advertising resulting from few introductions of "blockbuster" drugs over the next several years, and insurers' and employers' continued move toward coverage with incentives to use lower-cost drugs.
Near-term hospital spending growth is projected to accelerate more rapidly than projected last year, as recent data suggest that costs and utilization are rising faster than expected. The report now projects an increase in hospital spending of 8.3% for 2001, up from 5.1% in 2000.
Government public health spending growth is also expected to increase sharply in 2001 and 2002, reaching 16% in 2002. These growth rates are significantly faster than those projected last year, mainly because of funding increases required to upgrade the public health system to defend against bioterrorism. PR