Even without a history-making health care remake to deliver “Medicare-for-all,” government at all levels will be paying nearly half the nation’s health care tab in less than 10 years, according to a federal report released Wednesday.
The government growth is driven by traditional Medicare, which is experiencing a surge in enrollment as aging baby boomers shift out of private coverage, according to the analysis from the Centers for Medicare and Medicaid Services, part of the U.S. Department of Health and Human Services.
Federal, state and local governments will be paying 47 percent of the nation’s health care costs in 2027, up from 45 percent currently, the report said.
The report did not consider the potential impact of “Medicare-for-all” national health insurance plans from Democratic presidential candidate Bernie Sanders and other liberals. Nor did it delve into a financial rescue of traditional Medicare that could become a pressing political priority for all sides in just a few years. Medicare’s trustees have said the program will be insolvent in seven years, when its giant trust fund for inpatient care won’t be able to fully cover expected medical bills.
Spelling out the economic consequences of current laws and policies, the report serves as a reality check on the political debate over health care. That debate ranges from President Donald Trump’s warnings about lurking “socialism” to the suggestion from Sen. Kamala Harris, D-Calif., a 2020 contender, that the U.S. can simply “move on” to a new taxpayer-financed system that would cover all Americans.
“To the extent that a Martian landed and saw how much of the American health care system is funded by the government, it’s been about 50 percent for some time,” said economist Paul Hughes-Cromwick of Altarum, a nonprofit research organization.
The report projected that U.S. health care spending will surpass $5.9 trillion in 2027, growing to represent more than 19 percent of the economy. Health care spending is expected to increase somewhat more rapidly than overall economic growth from 2018 to 2027, underscoring an ingrained affordability problem for government, employers and U.S. households.
Rising prices for health care goods and services are expected to account for nearly half the spending growth, said the report, with the rest driven by a mix of factors, including an aging population and more intensive use of services. “The baby boom generation is expected to shift from private health insurance coverage to Medicare coverage during the projection period,” said Andrea Sisko, an author of the report.
Some experts have called attention to higher U.S. prices as a chief reason for the disparity in medical costs with other economically advanced countries.
Spending on prescription drugs is expected to pick up again after a recent slowdown, averaging about 6 percent a year from 2020 to 2027, the report found.
The nation’s uninsured rate was expected to remain relatively stable, hovering around 10 percent.
For politicians, the numbers are a double-edged reality check.
Trump’s warnings about “socialism” are undercut by the fact that much of the health care system is already paid for by the government. For Democrats contemplating a system fully funded by government, the trillions of dollars in new government spending that would entail are detailed in the report’s tables.
The report was published online by the journal Health Affairs.