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WASHINGTON | Tue., June 12, 2012 4:01pm EDT (Reuters) — The annual growth rate for U.S. health care spending will hover near historic lows in 2013 and rise at a modest pace for much of the next decade, even if the Supreme Court allows the Patient Protection and Affordable Care Act to proceed, according to a government report released this week.

The Centers for Medicare and Medicaid Services said health care spending will rise about 4% a year between now and 2014, when the health care reform law takes full effect. That compares with an average annual rate of 6.8% for the last decade. It reflects a modest economic recovery and a trend among employers to shift more insurance costs onto workers through high deductibles, said the report, published by the journal Health Affairs.

"We attribute a lot of this to the lingering effects of the recession and also the modest recovery after the recession, with the effect that consumers are being cautious about using healthcare goods and services," said Sean Keehan, senior economist at CMS, which is part of the Department of Health and Human Services.

The report forecast annual health care spending growth averaging 6.2% later in the decade as the economy rebounds and the baby boom generation retires in greater numbers, swelling the Medicare program for the elderly to 64 million beneficiaries and $1 trillion in spending in 2021.

Overall, health care spending is forecast to rise 5.7% per year between now and 2021, raising the spending total from a current forecast of $2.8 trillion to $4.8 trillion. Spending is also predicted to reach 19.6% of U.S. gross domestic product from the current 17.9%.

However, spending for 2013 could be higher than forecast if two of the report's assumptions prove false, officials said. CMS assumes that Medicare spending will be cut by 2% next year as part of efforts to control the federal budget, and that Medicare doctors will face a 31% cut in pay. But both measures could be overturned in Congress by year end.

Overall, the health care reform law is forecast to add $478 billion in new cumulative spending to the U.S. system by 2021. That amounts to only 0.1% added to annual health care spending growth over the decade and an equal-size reduction late in the period.

Health and Human Services Secretary Kathleen Sebelius claimed the report as a victory against critics who say the law will accelerate health care spending. She specifically cited a projected 1.5% decline in out-of-pocket costs for consumers in 2014, which officials said would reflect lower expenses for the newly insured.

(Reporting By David Morgan; Editing by Dan Grebler)

© 2011 Thomson Reuters. Click for Restrictions.

 

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