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Health spending to rise amid coverage expansion, economic growth

After five years of historically slow growth, the nation's healthcare tab is poised to grow again as the federal healthcare law expands coverage and the economy improves, according to a new government report.

Total U.S. spending on healthcare is expected to surge over the next decade, hitting $5 trillion in 2022, independent economists at the federal Centers for Medicare and Medicaid Services estimate.

That's up from $2.9 trillion this year and it will push healthcare spending to nearly 20% of the U.S. economy by the next decade.

Overall, government economists say President Obama's healthcare law will have little effect on the growth of the country's medical care costs.

Still, these new numbers show how little the Affordable Care Act will do to fundamentally alter the trajectory of healthcare spending.

"The primary emphasis of the health law is to reduce the number of uninsured," said Glenn Melnick, a USC health-policy professor. "It has limited ways to achieve cost containment. We should be realistic that the law will not substantially slow down spending."

The new report projects that 30 million more people will gain health insurance over the next decade under the health law. For the same period, total spending on healthcare will be $621 billion higher, or 0.1%, due to the Affordable Care Act.

In addition to the coverage expansion, the economic recovery and the nation's aging population will drive up spending, the federal report said.

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The new estimates say the extension of health insurance to about 11 million Americans next year will help elevate spending growth to 6.1% in 2014, up from a 3.9% boost this year.

The increases in spending have remained at less than 4% since 2009, the lowest levels since the government began tracking this data in 1960. For the next decade, health spending is estimated to rise 5.8% annually, a percentage point more than overall economic growth.

That would mark an improvement from earlier years. Annual growth was nearly 9%, on average, from 2001-2003.

The unexpected slowdown in medical spending in recent years has sparked considerable debate among policy experts and economists about whether this marked a temporary reprieve or longer-lasting trend.

During the recession, many employers scaled back insurance coverage and as a result patients have postponed care and paid more attention to prices.

Federal economists said historical data suggests health spending will pick up once economic conditions improve.

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Copyright © 2014, The Baltimore Sun
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