Health Care Spending to Double By 2016

WASHINGTON–U.S. health care spending will nearly double by
2016, reaching $4.1 trillion from $2.1 trillion in 2006–and the
fastest-growing sector is home health care.

According to a report from CMS’ National Health Statistics
Group, health spending will remain relatively steady from 2007
forward with average annual growth at 6.9 percent, and by 2016,
will account for 20 cents of every dollar spent. That works out to
$12,782 per capita, up from $7,498 projected for this year.

The report, published online last week in the journal Health
Affairs, said that home health spending is expected to
increase 1.4 percent over 2005 to 12.5 percent in 2006, making it
the fastest-growing service in health care. The increase is being
driven by Medicaid spending in the sector, which is projected to
increase from 14 percent in 2005 to 19.8 percent in 2006.

Total growth of home health spending is expected to average 7.6
percent annually from 2007 through 2016, with the strongest growth
coming from Medicaid.

DME spending for 2006 is expected to be $25.2 billion, up from
$24 billion in 2005. Spending on DME will hit $26.3 billion in 2007
and $37.6 billion by 2016, according to the report.

Meanwhile, overall national health spending is projected to
remain steady at 6.9 percent each year from 2007 through 2016.

Other projections in the CMS report include the following:

• Growth in spending for nursing home care is projected to
  decelerate from 6 percent in 2005 to 3.4 percent in 2006. But from
  2007 through 2010, nursing home spending will remain steady at 5
  percent a year before a gradual acceleration through 2016 due to
  the aging population.
• Hospital care costs are expected to be $651.8 billion for 2006
  and will hit $1.3 trillion by 2016.
• Medicare spending for 2006 is expected to be $417.6 billion
  compared to $342 billion in 2005. Spending for the government
  program is projected to reach $862.7 billion by 2016.
• Combined state and federal Medicaid spending is anticipated to
  be $313.5 billion in 2006, nearly the same as in 2005. The
  program’s spending growth is expected to be 7.3 percent in 2007,
  then average 8.2 percent per year from 2008 through 2016.
• The nation’s prescription drug spending will more than double
  by 2016, reaching $497.5 billion from $213.7 billion in 2006.

To view the full report, “Health Spending Projections Through
2016,” click here.