Annual healthcare spending hits $3.8T

Annual healthcare spending in the United States has hit $3.8 trillion, according to Forbes.

The Centers for Medicare & Medicaid Services (CMS) found that the percentage of the economy in 2013 devoted to healthcare fell slightly in 2013. Although CMS projects National Health Expenditures (NHE) for 2014 at $3.09 trillion, the Deloitte Center for Health Solutions forecasts costs as much higher, according to Forbes' Dan Munro. In 2011, Deloitte issued a report, "The Hidden Costs of U.S. Health Care: Consumer Discretionary Health Care Spending," putting the spending projections substantially higher than CMS'.

One of the biggest problems with trying to make NHE estimates, Munro writes, is that  the "sandwich generation,' which falls between children and aging parents, is responsible for a great portion of healthcare expenditures that "the government simply has no way to calculate or include in their summaries."

Also adding to uncertain cost growth is the prospect of repealing the sustainable growth rate (SGR) Medicare payment formula, according to Munro. The Congressional Budget Office (CBO) projects repealing the SGR will cost $116 billion, down from the original projection of $271 billion. Despite the lower projection, Munro notes, there is still no plan as to how to pay for repeal. "Whatever happens politically, the SGR is a healthcare budgetary dilemma and it is on the books," he writes.

"The larger issue is simply that we're not making any headway on one of the most important healthcare measurements of all--cost," Munro writes. Based on annual gross domestic product (GDP) calculations by the United Nations, the International Monetary Fund, the World Bank and the CIA World Factbook,  he states, "our annual healthcare spending is an economic unit larger than the GDP of Germany (which is itself the 4th or 5th largest GDP on the planet)."

The rise in healthcare costs is largely driven by medical innovations and healthcare reform, FierceHealthcare previously reported.

To learn more:
- read the Forbes article
- read the Deloitte report (.pdf)
- read the CMS report (.pdf)

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