Health care will account for one in five dollars spent in the U.S. by 2015, and health savings accounts are not likely to be popular enough to help much in containing costs, government analysts said Tuesday.
Driven by rising incomes of aging Baby Boomers and advances in medical technology, America’s health-care bill is expected to reach $4 trillion by that year, according to the annual forecast by the National Health Statistics Group at the federal Centers for Medicare and Medicaid Services.
At that point, health spending will consume 20 percent of the gross domestic product, up from 16 percent today, with the government paying about half, the researchers predicted. Families, employers and insurers will pick up the rest of the cost.
Although the new Medicare drug benefit might help tame the growth of prescription costs, the government economists and actuaries who compiled the forecast say they are not looking for much from the health savings accounts, which the Bush administration has touted as a key means of controlling costs.
“The net impact on cost containment is likely to be far smaller than that seen from the massive shift toward [health maintenance organizations] during the mid-1990s,” they write in the online edition of the Journal of Health Affairs.
The new Medicare drug benefit, on the other hand, appears to be curbing the escalation of prescription costs even though more people are getting needed medications. That’s because the insurers offering Medicare drug coverage negotiated better-than-anticipated discounts with pharmaceutical manufacturers, the forecasters said.
The forecast projects a 7.2 percent average annual increase in health-care costs over the next decade, well above the 5.1 percent growth rate predicted for the overall economy.
John Poisal, deputy director of the National Health Statistics Group, said the continued escalation in costs is fueled by consumer demand for an ever-increasing array of new medical techniques and capabilities.
“It’s consumption and investment,” he said. “But, primarily, it’s about consumption.”
President Bush, most recently in his State of the Union address, has promoted health savings accounts as an antidote to unchecked spending. The accounts allow families to save money tax-free to pay for health expenses that are not covered by high-deductible insurance plans.
The accounts are part of a trend toward so-called consumer-driven health care. The idea is that consumers will spend less if they bear more of the expense.
But only about 3 million Americans, less than 2 percent of those in private health plans, are enrolled in plans that qualify for health savings accounts.
“Given the small number of people affected, we don’t expect the effect to be huge,” said Sheila Smith, an economist and co-author of the forecast.
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Some experts said the problem is that 80 percent of the nation’s health-care bill is spent on the 20 percent of Americans who are chronically ill. They are viewed as least likely to be affected by health savings accounts because they spend more than their deductibles.
“It’s hard to see where we will see sustained savings,” said Paul Fronstin, an economist at the Employee Benefit Research Institute, a Washington think tank supported by companies, labor unions, insurers and health-care providers.
Even if the accounts were able to grab a large share of the market, they are not likely to achieve the cost reductions that HMOs squeezed from physicians and hospitals in the 1990s, experts said, because individual consumers lack the same purchasing power.
“The people who think [health savings accounts] are the magic bullet need to think this through,” said Bob Laszewski, an insurance industry consultant. “It’s almost a no-brainer to say they’ll have nothing close to the leverage managed care had.”
Even proponents of consumer-driven health care agreed with the forecast’s outlook for health savings accounts.
Devon Herrick, a senior fellow at the National Center for Policy Analysis, a Dallas-based think tank, and one of the earliest promoters of consumer-driven health care, said part of the problem is that federal rules have hamstrung insurance companies’ ability to offer the accounts with features that would make them more popular.
“I wouldn’t argue with their assessment” in the forecast, Herrick said.
If health savings accounts ultimately fail to contain costs there is not much to fall back on because the focus on them is keeping other, more controversial, ideas out of the national debate, said Larry Levitt, vice president of the Kaiser Family Foundation, a non-profit health policy think tank.