By PETER LANDERS, For the first time, government programs next year will account for more than half of all U.S. health-care spending, federal actuaries predict,  as the weak economy sends more people into Medicaid and slows growth of private insurance.

 The figures show how federal and state spending is taking a bigger role while Congress hesitates over a health-care overhaul.

Over the next ten years, health spending is expected to balloon to $4.5 trillion. Despite this, the government's health overhaul has stalled, Peter Landers reports.

Government health programs are a growing burden on the federal budget, which is running annual deficits of more than $1 trillion, and rising health costs continue to batter private industry.

By 2020, according to the new projections, about one in five dollars spent in the U.S. will go to health care, a proportion far beyond any other industrialized nation.

"It's going to be a desperate issue five to 10 years out," said Gail Wilensky, the former top Medicare official in the George H.W. Bush administration. She said the U.S. will have to decide soon between raising revenue to pay for Medicare or reducing benefits.

Public funds accounted for 47% of the $2.34 trillion of national health spending in 2008, the last year for which figures are available. The federal Centers for Medicare and Medicaid Services estimates in a paper to be published Thursday in the journal Health Affairs that the proportion will rise to 50.4% by 2011. Last year, the federal actuaries had predicted the 50% mark wouldn't be reached until around 2016.

The latest estimate assumes Congress will act to prevent a sharp cut in Medicare payments to doctors, which is set to take effect in March under current law. Congress has consistently done so in earlier years.

The rise in Medicare, the federal health program for the elderly and disabled, and Medicaid, the federal-state program for the poor, is driving an increase in overall health spending.

The paper estimated that U.S. health spending hit $2.5 trillion in 2009, up 5.7% from the previous year. That represents 17.3% of gross domestic product, up from 16.2% in 2008, because the overall economy shrank last year. A decade from now, health spending is projected to hit about $4.5 trillion a year.

Growth of Medicaid accounts for much of the shift toward publicly funded health care. The paper predicted enrollment in Medicaid would rise 5.6% this year and spending would rise 8.9%.

Meanwhile, the number of people with private health insurance is falling slightly because of high unemployment.

Many states are having trouble funding their share of Medicaid. President Barack Obama's budget proposal for the fiscal year beginning Oct. 1 calls for $25 billion in federal help for covering Medicaid costs.

Over the longer term, the public share of health spending is expected to rise further because the first baby boomers will turn 65 in 2011 and become eligible for Medicare.

Also, the rising number of elderly will add to Medicaid spending on nursing homes and other services for the poor. The actuaries estimated that the public share would reach 52.6% by 2019.

Medicare and Medicaid account for the bulk of government spending on health care. Federal and state programs for veterans, children and others make up the rest.

Democratic health-overhaul bills would expand the public role further by widening eligibility for Medicaid and giving lower-income people subsidies to buy insurance.

Republicans said the bills would make the government too deeply involved in health care. The legislation is in doubt now after a Republican victory in last month's Senate election in Massachusetts.

Mr. Obama often described his health plan as an effort to counter the sharp rise in health costs.

His plan included cuts to the growth of Medicare, but Republicans noted that much of the money raised was going to new programs such as the subsidies.

Journal Community discuss“ If we're the richest country on earth, and Britain and Italy can take care of their sick for less, then why aren't we? ”

—Donald Sherwood House Minority Leader John Boehner of Ohio said the report illustrates that the Democrats' bill is the wrong answer to lowering health costs.

"They need to scrap it, and start working in a bipartisan way on the step-by-step reforms to lower costs that the American people want," he said.

"There is nothing inherently wrong with crossing this threshold, especially in light of the recession. These data show that government programs are working as intended," said Rep. Charles Rangel (D., N.Y.), chairman of the House Ways and Means Committee. "However, these projections do reinforce the need to enact comprehensive health reform, like the legislation passed by both chambers, that lowers costs for individuals and businesses and improves coverage."

Government spending on health care in the U.S. is estimated to have accounted for 8.4% of GDP in 2009.

That is nearly equal to total health spending—public and private—in some European countries such as Britain and Italy, according to Organization for Economic Cooperation and Development data.

—Janet Adamy and Alicia Mundy contributed to this article.

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