Health care spending reaches $1.7 trillion

updated 2:53 p.m. ET Feb. 11, 2004

WASHINGTON - Health care spending in the United States grew to an estimated $1.7 trillion in 2003 — more than $5,800 for every American — but the pace of growth was slower than in recent years.

Health care also for the first time was projected to make up more than 15 percent of the national economy last year, the federal Centers for Medicare and Medicaid Services said Wednesday.

Government spending on Medicaid and Medicare increased last year, but more slowly than in 2002, helping contain the estimated overall increase in spending, CMS said.

The CMS report, released on the Web site of the journal Health Affairs, said that health care spending grew a projected 7.8 percent in 2003, down from 9.3 percent in 2002.

Health care spending, however, is projected to outpace growth in the rest of the economy for the next 10 years, CMS said. By 2013, annual spending on health is expected to reach $3.4 trillion and be more than 18 percent of gross domestic product.

The projections did not include the anticipated effects of the new Medicare prescription drug law, which will offer seniors prescription drug coverage beginning in 2006. CMS officials said they expect a shift in who pays prescription drug bills rather than a significant increase in spending on drugs.

“Our story, with or without the legislation, doesn’t change much,” said Stephen Heffler, CMS’ deputy chief actuary and lead author of the report.

Prescription drug spending, however, will continue to outpace the rest of health care for the next 10 years, Heffler said at a conference about the report.

Dan Crippen, the former director of the Congressional Budget Office, said that huge changes in health care spending lie just beyond 2013, the end of the period covered in the report, when Baby Boomers start reaching retirement age.

“It will be the beginning of something we haven’t seen before,” Crippen said.

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