Health costs swamping U.S. economy

Jeanie Keenan and her family are drowning in a sea of medical expenses.

“I’ll tell you now, the way the medical is going and the insurance is going, the high rise of it,  there’s going to be a lot more people in my situation,” she said. “A lot more.”

Two of her seven children have severe asthma. Her husband, a construction worker, has been in and out of work with back and knee injuries. And Jeanie herself has heart and lung diseases.

Even though they have health insurance, this Hampstead, Maryland  family owes $30,000 in medical bills. The Keenan’s credit rating is ruined; they've filed for  bankruptcy. She's afraid of what may be next.

“It would be very hard for us … to go ahead and lose the house,” Keenan said.

Keenan is the human face of a staggering national problem. One new study shows half of all personal bankruptcies are caused by medical expenses.

“The middle class is in trouble in the health care system in this country. It’s not just the uninsured," said Harvard Medical School professor Dr. David Himmelstein, a cofounder of Physicians for a National Health Program and lead author of the study.

Escalating health care costs impoverish families, hurt the economy, and force government into agonizing choices.

Since 1990, medical spending soared from $696 billion to a projected $1.7 trillion dollars last year. That’s 15 percent of the Gross Domestic Product.

‘Health care is going up at such a rate, that it’s going to reach the point -- and we think its already reached the point -- where it’s an unsustainable situation.’ — Patricia Schoeni National Coalition on Health Care

“Health care is going up at such a rate, that it’s going to reach the point — and we think its already reached the point — where it’s an unsustainable situation,” Patricia Schoeni, executive director of the National Coalition on Health Care.

If current trends continue, the Medicare hospitalization trust fund will run out in 2019 — much sooner than the Social Security trust fund.

The new Medicare prescription drug benefit will cost close to $1 trillion dollars — far more than the Bush administration originally predicted.

And Medicaid, the federal-state health program for 50 million impoverished Americans, has already decimated state budgets. Last month, Tennessee dropped 323,000 adults from Medicaid rolls, and Missouri plans to cut 89,000.

“States right now are making the toughest choices — often looking at grandparents fighting for health concerns with their grandchildren,” said Kansas Democratic governor Kathleen Sibelius. “That’s not a great place to be.”

Behind the increase: advances in medical technology, new drugs, and an aging population requiring more care. 

“We're looking at Medicare and Medicaid doubling as a share of GDP by 2020 — and doubling again by 2040,” said Henry J. Aaron, a senior fellow at the Brookings Institution. “The implications of those trends for higher taxes of enormous cuts elsewhere in the federal budget or both, are so severe that something’s got to give.”

Back in Maryland, Jeanie Keenan just hopes she can save her home.

“And my kids can stay where they're at and be happy and develop,” she said. “And not worry, ‘Mom, is this the day we are going to be thrown out?’”

MORE FROM CNBC TV

CNBC TV Section Front

CNBC: Coke looking for the next real thing CNBC: GE in talks to spin off NBC Universal Battle over wages brews at Wal-Mart CNBC report: Ultimate Fighting CNBC Special Report: As Seen On TV Special Report: Cruise Inc. Buffett: The economy has ‘fallen off a cliff’ CNBC on the new black overclass Housing boom was a house of cards Marijuana growers thrive in California CNBC TV Section Front   Add CNBC TV headlines to your news reader: