by Daniel Costello

A decades-long boom in spending on doctors, hospitals and drugs slowed in 2008 to its lowest level in nearly a half century, but still reached $2.3 trillion and swallowed up 16.2 percent of the U.S. economy, the federal government said in a report released Tuesday.

Health care spending rose 4.4 percent in 2008 to $2.3 trillion, or $7,681 per person, the smallest increase since the spending was first tracked in 1960, according to the Centers for Medicare and Medicaid Services. The report suggests the down economy forced Americans to go without care.

 

The report illustrates the huge burden health care costs place on the United States.

Democrats this week are launching a final drive to get health care reform legislation through Congress. The Senate and House of Representatives have passed their own versions of the bill. Democrats now must meld the two versions together into a single bill that Congress would have to pass again and send to President Obama to sign into law.

In a worrying sign for public pension holders, the chairman of New Jersey's pension fund, Orin Kramer, told London's Financial Times that states are currently trillions of dollars short of being able to pay their public pension requirements - a far higher shortfall than any public official has stated up until now. Kramer said he studied the 25 largest public pension funds in the nation to come up with the figure.

"Estimates of funding requirement of the US pension system have ranged between $400 billion and $500 billion, but public funds would need to find more than $2 trillion to meet future pension obligations," he said.

It's unlikely states or the federal government can afford to make up the shortfall. Many states are cutting budgets for current services and have no reasonable way to increase contributions to pension plans. The only solutions appear to be cutting pensions or raising taxes, but both would be difficult politically and could blunt economic growth.

And former Time-Warner chief Jerry Levin went on television yesterday a decade after the merger of AOL and Time Warner and, in a move uncommon for a such a high-profile corporate executive, apologized for the deal: "I presided over the worst deal of the century....It wasn't the board. It wasn't my colleagues at Time Warner. It wasn't the bankers and lawyers."

Levin, who sat beside former AOL boss Steve Case, said, "I'm really very sorry about the pain and suffering and loss that was caused. I take responsibility."