Here’s a newsflash for those fretting that Democratic health reform will lead to a “government takeover of the health care system” – the feds will account for more than half of all U.S. health spending by 2012 even if nothing changes. According to a report out today from economists at the Centers for Medicare and Medicaid Services, federal spending on health care grew faster than private spending in 2009, as more people fell off private insurance rolls and signed up for Medicaid. While the recession is largely to blame for changes in 2009, CMS predicts the trend of an increasing government role in health spending to continue. One reason: As more baby boomers grow old enough to qualify for Medicare, that program is on track to grow substantially.
The CMS report couldn’t have come at a better time for Democrats. Their health care reform legislation is on the ropes, with newly elected Republican Sen. Scott Brown due to be sworn in today, reducing the Democratic Senate majority to 59, one short of the number required to break a filibuster. Dramatic figures in the CMS report show that health care accounted for 17.3% of the U.S. economy in 2009. The increase in health spending, from $2.34 trillion in 2008 to $2.47 trillion in 2009, was the largest one-year jump since 1960. CMS predicts total U.S. health spending in 2019 will be $4.5 trillion. This will bolster the Democratic argument that dramatic health reform is an urgent need that must happen quickly. President Obama continued this week to push Congressional Democrats to get health reform legislation to his desk, both at a town hall in New Hampshire and speaking directly to a meeting of the Senate Democratic caucus yesterday. Of course, getting a bill out of Congress is no small task.
(Although the House and Senate reform bills differ on some details, both would begin to tackle the burdens of the Medicare program on the federal budget, largely by eliminating a subsidy for private Medicare Advantage plans. The bills would also, however, expand the size of the Medicaid program. Still, the Congressional Budget Office predicts the House and Senate health reform bills would both reduce the deficit over the long term.)
In 2009, the federal government spent about $500 billion on Medicare; the federal government and states spent some $380 billion on Medicaid. These two programs accounted for about one-fifth of the entire federal budget.
I’ve said here before that Democrats have basically failed to convince Americans that the health system needs to change, so whether they’ll successfully translate this CMS report in a renewed call for reform is a very open question. But expect to read more about these figures this week, while health care spending slowly creeps from being one-sixth of the U.S. economy to one-fifth.