Study: More money will go to health care

A doctor applies sutures to an injured teen in La Jolla, Calif.

KAI RYSSDAL: Check your economic calendars and you'll see today's the day we get one of those A-list indicators. The consumer price index came out this morning. Inflation by another name.

It's not so bad. The core rate was up three-tenths of 1 percent last month. Mostly in a drop in energy prices. But get a load of some of the other details. Airline ticket prices were up. Hotels and rents were up. Tobacco was up. And medical care prices had their biggest jump in more than 15 years.

Knowing that, this next number shouldn't come as too much of a shock. A study out today in the journal Health Affairs predicts national health care spending will double in the next 10 years. To more than $4 trillion. One out of every $5 we'll spend will be for health care. And Marketplace's Amy Scott reports Uncle Sam will be footing more of that bill.


AMY SCOTT: It's no surprise that health care costs are rising. But the Health Affairs report suggests there's another reason Americans are spending more.

John Poisal is the study's co-author, and a deputy director with the Centers for Medicare and Medicaid Services. He says lately, people are earning more money.

JOHN POISAL: As incomes increase by 1 percentage point, typically expenditures for health care increase by 1.4 percentage points.

By 2016, Poisal says the federal and state governments will cover nearly half of all national medical expenses. That's partly because Medicare began offering a prescription drug benefit last year, so the program's costs have jumped. And the first wave of Baby Boomers will soon be eligible for Medicare.

Paul Ginsburg heads the nonprofit Center for Studying Health System Change.

PAUL GINSBURG: The government's obligations for health care are growing faster than the revenue base. So ultimately, it's going to mean higher taxes.

As the government covers more of the country's medical bill, the kind of single-payer system some Democrats have been pushing doesn't seem far off.

Don McCanne with Physicians for a National Health Program says when you include public employee health plans and tax subsidies, the government is already paying two-thirds of the nation's health costs.

DON MCCANNE: And that's about what most nations pay for their government-sponsored health care programs. So we're paying for national health insurance, we're just not receiving it.

If we were, McCanne says the government would save on the order of $350 billion a year in administrative costs. And a single payer could use its clout to negotiate lower prices.

In New York, Ia€™m Amy Scott for Marketplace.

About the author

Amy Scott is Marketplace’s education correspondent covering the K-12 and higher education beats, as well as general business and economic stories.

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