Health spending to get bigger share of economy

A pharmacy employee places instructional stickers on a bottle as she works to fill a prescription while working at a pharmacy in New York December 23, 2009.

WASHINGTON (Reuters) - U.S. health spending will grow faster than the overall economy this decade and by 2019 nearly 20 cents of every dollar spent in the United States will go for healthcare, U.S. government analysts said on Thursday.

Economists at the Centers for Medicare and Medicaid Services, known as CMS, said in a new report that the national healthcare spending will grow an average 6.1 percent a year over the decade to $4.5 trillion in 2019, about 1.7 percent faster than the overall economy. Healthcare will account for 19.3 percent of the economy in 2019, the report said.

Last year an estimated $2.5 trillion was spent on healthcare in the United States, accounting for about 17.3 percent of the economy, the report said.

The United States spends more on healthcare than any other country, even with about 46 million people lacking medical coverage. An effort by President Barack Obama to expand health coverage and rein in soaring costs stalled in the U.S. Congress after Democrats lost their supermajority in the Senate following a special election in Massachusetts last month.

Democrats are weighing their options on how to advance the legislation in the face of solid Republican opposition.

The CMS report shows that medical spending and numbers of uninsured will continue to grow in the absence of reform.

"This report basically says nothing much has changed in that regard," said CMS chief actuary Richard Foster.

"All that (rising medical costs and the uninsured) is still there, all that argues that some form of healthcare reform is still a good idea," he added.

By 2019 the United States will spend about $13,387 per person per year on healthcare. That is up from about $8,047 in 2009 and a projected $8,290 per person in 2010, the report said.

The economic slump had a big impact on slowing the growth of private health spending as laid-off workers lost employer-sponsored coverage. At the same time, spending by the Medicaid government health program for the poor has gone up.

Public payments will account for half of all U.S. healthcare spending by 2012 and reach 52 percent by 2019 as baby boomers increasingly sign up for the Medicare health program for the elderly, the CMS economists said.

The report said spending on prescription drugs grew by an estimated 5.2 percent in 2009 due mostly to higher prices for brand name drugs. An improving economy will accelerate spending growth for prescription drugs to 5.6 percent by 2011, they said.

But growth in prescription drug spending will slow in 2012 and 2013 as patents expire on many top selling brand-name drugs sold by big pharmaceutical makers such as Pfizer and Merck, the report said.

After that, growth in drug spending will begin to accelerate again to 7.7 percent in 2019 because of rising drug prices and new drug approvals as well as an increasing share of more expensive specialty drugs, the report said.

(Reporting by Donna Smith; editing by Anthony Boadle)