HCFA study estimates health care spending jump

A recent study by the Health Care Financing Administration, titled National Healthcare Expenditures, predicted national spending for health care will increase from $1.0 trillion in 1996 to $2.1 trillion in 2007, averaging annual increases of 6.8% over this period. Health spending as a share of gross domestic product is estimated to increase from 13.6% to 16.6%.

National health spending growth is expected to accelerate beginning in 1998, growing at an average annual rate of 6.5% between 1998 and 2001. This compares to 5.0% average annual growth from 1993-1996. The slower growth over the past few years was due mostly to slow spending growth in the private sector (2.9%), while public-sector spending grew more quickly (7.5%).

Between 1998 and 2001, private-sector health expenditures are predicted to grow at a faster average annual rate (7.2%) than public-sector spending (5.7%).

According to the report, real per capita private-sector health spending growth is projected to accelerate as "recent stronger growth in real per capita income is expected to boost underlying demand for medical services, and higher medical inflation is expected to fuel increasing health spending growth. An anticipated slowdown in the growth of private-sector managed care enrollment and a pause in the downward trend for private health insurance coverage also are expected to contribute to the acceleration in health spending growth."