The nation's health-care bill, which now accounts for 10.9 percent of the total U.S. output of goods and services, will grow to 15 percent of the gross national product by the turn of the century, according to a new federal report.
The report said the steep increase will be driven largely by America's willingness to devote a growing share of its income to health care and by its reliance on costly new medical technologies.
The country's total health-care costs will more than triple by the year 2000 -- from the current level of $458 billion to $1.5 trillion, according to the report, about to be released by the Department of Health and Human Services.
The Washington Post yesterday obtained a copy of the cost data, which is produced each year by the department's Health Care Financing Administration. The report indicates that changing patterns of use, rather than an aging population, will account for a large portion of the nation's growth in health-care costs.
It added that spending on health care rose more rapidly in the past year than did GNP, which is the broadest measure of economic production. Health care accounted for 10.6 percent of GNP a year ago and now accounts for 10.9 percent. The report projects that annual health expenditures will grow from $1,837 per person in 1986 to $5,551 in 2000.
The percentage the federal government shoulders is expected to grow slightly by the year 2000, principally because the number of people on Medicare should increase faster than the total population.
"The American life style is leading to a greater consumption of health care and the health care we are consuming is costing us more each year," said a senior government economist familiar with the report. "The magical new products medicine has produced have a cost to society."
Although many new machines can reduce the costs of tests, sophisticated imaging machines that scan the body cost millions to manufacture and almost as much to use. Costly transplants and expensive surgery have become common at many facilities around the nation.
The report noted, however, that health-care spending is rapidly shifting from hospitals to private doctors, health maintenance organizations and nursing homes.
In 1976, hospital employment accounted for almost two-thirds of all health-service employment. By last year, the share had fallen to 55 percent. The rate of decline increased sharply after 1982, when major efforts were launched across the nation to limit hospital admissions.
Admissions are now at a 16-year low for patients under 65 in community hospitals, the report said. The average number of days a patient remains hospitalized is now at an 18-year low.
The report found price inflation rather than increased use accounted for 54 percent of the increase in the cost of personal health care in the past year.
Population growth was responsible for 11 percent of the increase, and the remaining 35 percent was attributed to changes in consumption.
"Income is increasing in the country and as it does people want to spend more on their health," said one federal health official, who asked not to be named because the report was not yet published.
Personal health-care expenditures as a fraction of personal income grew from 11.2 percent in 1985 to 11.6 percent in 1986, an increase of 3.5 percent. Had personal health expenses grown at the same rate as personal income, consumers would have had $13.6 billion more to spend on other goods and services, the report concluded.
Spending on nursing home care rose by more than 9 percent in 1986, to $38 billion. As the population continues to age, that percentage will keep rising, according to the report.
The federal share of spending on health will continue to rise -- from 29.4 percent in 1986 to 32.6 percent in 2000.
Although population shifts are often cited as the biggest reason for changes in health-care spending patterns, the report said demographic changes will not matter in the near future.
"So far, the effects . . . have only modestly influenced the health-care industry," the report said. "But the biggest impacts are expected to occur in the next century because health-care use rises rapidly after age 65."
The bulk of the post-war baby-boom generation will not reach retirement age until 2010. The report predicted the "baby boomers" will have a profound effect on demand for medical services and the ability of society to pay for them.