A very scary report from the U.S. Centers for Medicare and Medicaid Services was published today in the journal Health Affairs. 

According to this report, even if healthcare reform falls by the wayside, federal and state programs will pay for more than half the cost of healthcare in the US by 2012.

Health care spending jumped to $2.5 trillion, or 17.3 percent of the economy in 2009, the report states. The annual increase in share of gross domestic product, from 16.2 percent in 2008, was the biggest since record keeping began in 1960.

President Obama’s budget director, Peter R. Orszag, told the House Ways and Means Committee yesterday that health care costs will fuel a growing budget deficit and “we cannot close the long-term fiscal shortfall” without bringing them under control. 

All health care spending will probably grow at an average annual rate of 6.1 percent from 2009 through 2019, which is 1.7 percentage points faster than the projected growth in the economy, as measured in gross domestic product, economists said.

 Even as the economy shrank because of the downturn, health care spending grew by 5.7 percent from 2008. Government health care spending grew nearly three times faster than private spending.

Driving much of the cost surge was Medicaid, the federal-state program for low-income people. It grew by nearly 10 percent last year. 

Many long-term care insurance specialists believe that lots of the increase in Medicaid spending is due to the relative ease with which ordinary middle-class people can artificially impoverish themselves down to Medicaid eligible income thresholds. Medicaid currently pays for approximately 50% of long-term care costs in the US. 

This is really scary stuff! If you’re over 55 and don’t own long-term care insurance, you have your head buried in the sand, which won’t help you much if you ever need care.

Sources: Associated Press and Bloomberg News