Elder Law FAX The January 29, 2007, issue of Elder Law FAX, a free newsletter published every other Monday by the Elder Law Practice of Timothy L. Takacs. How Much Do Americans Spend on Health Care and Long-Term Care? Health care spending in the United States slowed for the third consecutive year in 2005, according to figures released earlier this month by the U. S. Centers for Medicare & Medicaid Services (CMS).   In 2005, health care spending increased 6.9 percent over the previous year. By comparison, in 2004 spending increased 7.2 percent and in 2003 8.1 percent, said the federal agency that administers the Medicare and Medicaid programs.   The 6.9 percent growth figure is the slowest rate of growth since 1999, when growth was 6.2 percent. Health care spending reached almost $2.0 trillion in 2005, or $6,697 per person, up from $6,322 per person in 2004.   The health spending share of the nation's Gross Domestic Product (GDP) increased slightly, from 15.9 percent in 2004 to 16.0 percent in 2005.   This constrained spending growth is due in part to the anticipated lagged effects of the 2001 recession, as well as to weaker growth in prescription drug spending, says the CMS report. Growth in retail prescription drug sales slowed for the sixth consecutive year, increasing just 5.8 percent in 2005 following 8.6 percent growth in 2004 and 10.6 percent in 2003. This slowdown was primarily due to a dramatic decrease in Medicaid prescription drug spending, along with increased use of generic drugs.   Medicare increased 12.0 percent in 2005 after increasing 16.2 percent in 2004, due in part to slower growth in the use of Medicare skilled nursing facility services and in Medicare payment per day.   Included in the health care numbers is the cost of long-term care, such as in nursing homes.   Nursing home spending increased 6.0 percent in 2005, following growth of 4.1 percent in 2004, to $121.9 billion. Medicaid, representing 44 percent of funding for nursing home care and over 50 percent for all long-term care services, grew 3.9 percent in 2005.   Is There a Limit on Spending Growth? The good news is that spending growth has slowed. The not-so-good news is that spending on health care and long-term care continues to increase, and at a rate higher than spending as a whole in the U. S. economy.   The Congressional Budget Office (CBO) projects that under current law, federal spending for Medicaid will nearly double over the next 10 years -- growing from $190 billion in fiscal year 2006 to $363 billion in 2015, at which point it will account for about 2 percent of gross domestic product (GDP). Spending by the states for Medicaid will increase correspondingly, placing further demands on states' budgets. But, says CBO, rising health care costs are also a significant issue for private payers and the economy as a whole, with the overall share of GDP spent on health care projected to climb from 16.0 percent in 2005 to 20.0 percent in 2015.   There has been much talk about whether more money could be saved on Medicaid.   According to an analysis released late last year by the Kaiser Family Foundation's Commission on Medicaid and the Uninsured, seven percent of Medicaid beneficiaries who utilize long-term care services account for over half of all Medicaid spending.   The findings from the Kaiser report suggest, however, that savings will only come from reforms that focus on the total needs of these very sick beneficiaries and not just on their long-term care use. For example, people who have chronic illnesses need good chronic care. If they don't get it, they are more likely to need nursing home care sooner rather than later if the health care system is unable to address their total needs, such as how to help them deal successfully with their illnesses.   Next issue: Findings about disability among older Americans