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Medical Expenses Have ‘Very Steep Rate of Growth’

WASHINGTON - Spending on health care consumed an estimated 17 cents of every dollar spent last year in the United States, representing the largest one-year increase since the federal government started tracking the number in 1960.

By 2019, health care spending will represent 19.3 percent of the nation's total economic output, according to a report released today by the Centers for Medicare and Medicaid Services.

The report is the latest indication of the nation's mounting medical expenses and it comes as Congress has stalled on President Obama's proposal to revamp the health care system.

At a meeting with Senate Democrats on Wednesday, Obama urged lawmakers to continue their work on the issue even as Congress has shifted its attention to addressing the nation's unemployment rate.

The rapid increase in health care spending as a percentage of the economy - up from 16.2 percent in 2008 to 17.3 percent last year - can be partly explained by the recession. Although the nation's gross domestic product (GDP) declined in 2009, health care spending rose to an estimated $2.5 trillion in 2009, or $8,047 per person, according to the report. That number will grow to $4.5 trillion in 2019, or 19.3 percent of GDP, which is the entire economic output of the USA.

"This is certainly a very steep rate of growth," said Christopher Truffer, an author of the report.

The share of health care spending is projected to remain flat in 2010 and 2014 as the economy improves, the report said.

Among the report's findings:

- Spending on prescription drugs was estimated at 5.2 percent to $246 billion in 2009. That growth was driven partly by demand for antiviral drugs to treat the H1N1 flu, the report says.

- Spending on public health programs will continue to outpace private health care spending as more Baby Boomers become eligible for Medicare and the economy continues to force more people into Medicaid. In 2014, the federal government will spend $1.64 trillion, compared with $1.58 trillion in private funds.

- Out-of-pocket medical spending was estimated at $284 billion in 2009, a 2.1 percent increase. That's less than the 2.8 percent growth in spending between 2007 and 2008.

The House of Representatives and Senate had passed versions of Obama's health care bill but the effort came to a standstill after Republican Scott Brown won a special Senate election in Massachusetts on Jan. 19. Brown will give Senate Republicans the 41 votes they need to block legislation.

One approach Democrats are considering is breaking the larger health care legislation into smaller pieces.

Democratic Reps. Tom Perriello of Virginia and Betsy Markey of Colorado say they will introduce a bill Friday to repeal the antitrust exemption for health insurance companies - an idea proposed as part of the broader health care effort. The House plans to take up the bill next week, Speaker Nancy Pelosi's spokesman Brendan Daly said.

Experts such as Gary Claxton, who studies health care costs for the non-partisan Kaiser Family Foundation, say the growth in medical spending has been rising faster than the economy for decades. The report, he said, is the latest warning. "It's a reminder, but it's no different from what we've known," he said. "As long as it's growing faster, it's going take over more and more of the economy."

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