Health Spending Growth

The United States has a serious budget problem.  Way too much spending.  One of the biggest areas of federal, and state, spending, is health care.  Between Medicare and Medicaid, the VA and other health programs, this is likely the single largest area of federal spending.  We need to rein it in.  We need to stop paying for health care for people who can afford to pay for it themselves and we need to stop paying for it for people who just don’t want to work.  We need to ferret out waste and abuse.  We need to reduce payments to health systems that have excessive administrative staff and overpay executives.  We need to use the patent system to force reductions in drug costs.  We need to break up the large health systems.  All of this makes perfect sense and would reduce our spending substantially.

I don’t expect it to happen because rich people would suffer, well, not suffer, but be unhappy that they weren’t getting even richer.  And rich people, in our warped election financing system, control everything.  And because we won’t do anything about this or our other spending problems, eventually we will kill ourselves with inflation and lack of economic growth.  This report details the likely growth of health spending in the absence of major reforms.  Annual per capita health spending will be over 5% per year for the next few years, much higher than economic growth or the rise in federal revenues.  The authors claim that federal drug pricing limits in Medicare will help, but they don’t really make a dent in spending.  Medicaid and Medicare spending will increase slightly faster than that in private plans.

The report says that our actual spending is now below what was projected a decade ago, but it has still risen faster than the economy has grown.  I think the projections for the next decade are actually low, given the inflation experienced by health care providers.  We need reforms now to get this critical part of federal spending under control.  It won’t happen.  (HST Report)