Advancing a Free Society

The Picture of Health

Saturday, April 7, 2012

From the facts, we know that Americans enjoy outstanding access and quality in their health care system. The only real “crisis” in America’s health care today is the unsustainable, increasing burden of health care costs on the government budget and the economy. The federal budget is directly affected by the rising cost of health care in two major ways: first, Medicare and Medicaid outlays increase as the population ages and as medical practice expands along with more advanced interventions; and second, tax subsidies for health care are massive, and they increase as the cost of tax-sheltered insurance rises.

According to the Centers for Medicare and Medicaid Services (CMS), total health spending has reached about $2.6 trillion, amounting to 17.6 percent of GDP in 2010. Although part of the rise results from a predictable growth in the number of aged beneficiaries, more of it is attributed to the way costs per beneficiary are expected to continue growing faster than per capita GDP. National health spending is expected to rise 5.8 percent per year from 2010 through 2020, culminating in a 19.8 percent share of GDP by 2020.

If such excess growth—as economists call it—continues as projected, federal spending on health care alone will approach the total amount collected in federal tax revenues within fifty years.

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