After all, we’re the wealthiest nation in the world. And what is more important than the health of our citizens?
Nevertheless, even in the U.S. resources are finite. And in 2007, Congressional Budget Office director Petter Orzag warns, “The central fiscal challenge facing the nation involves rising health care costs.” In a recent letter to the House Subcommittee on Health chairman Pete Stark, Orzag frames the problem in a way that no one can ignore by comparing how much faster healthcare spending is growing than income per capita. “The rate at which health care costs grow relative to income is the most important determinant of the nation’s long-term fiscal balance,” he explains. “It exerts a significantly larger influence on the budget over the long term than other commonly cited factors such as the aging of the population.”
Let’s cut to the bottom line: If health care inflation continues to outstrip income growth over the next forty years at the same rate that it has over the past 40 years, spending on Medicare and Medicaid alone will rise to 20 percent of GDP in 2050. (To give you a sense of how big a slice of the pie that is: today, the entire federal budget equals roughly 20 percent of GDP).