Healthcare Projected to Account for This Insane Percent of the US National Budget by 2020

U.S. health bill spending will account for 19.8% of the national budget by 2020, up from 17.6% in 2009, with an estimated 30 million people gaining health insurance due to last year’s healthcare overhaul. That’s a lot of healthcare (NYSE:XLV)!

National health spending is expected to average an annual growth rate of 5.8% between now and 2020, whereas without the Affordable Care Act, it would have averaged 5.7%. However, while the Act means that consumers will be responsible for a smaller share of their healthcare expenses, that does not mean they will be saving money. The cost of healthcare (NYSE:XLV) is rising at a substantial pace, faster than the growth rate of both the economy and disposable personal incomes.

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The potential for increased health spending has many concerned as the government is already facing a deficit threatening to outweigh GDP, and has struggled with agreeing on a plan to raise the debt ceiling. Though President Obama’s healthcare bill was passed in 2010, much of its law will not be implemented until 2013, which means that the largest increase in healthcare spending will come the following year. The Centers for Medicare and Medicaid Services forecasts that healthcare spending will increase by 8.3% in 2014 over the previous year. Then from 2015 to 2020, spending growth will average 6.2% annually.

The newly insured, or those who previously had limited policies, are likely to account for the most growth in healthcare (NYSE:XLV) spending as they start scheduling regular check-ups, and take advantage of clinical services and prescription drug coverage. Because the newly insured are likely to be relatively young, they are more likely to take advantage of more basic services rather than acute care like surgery, chemotherapy, and the like.

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