Addressing Rising Health Care Costs — A View from the Congressional Budget Office

The New England Journal of Medicine’s “perspective” editorial is more than a little interesting:

The long-term fiscal balance of the United States will be determined primarily by the future rate of growth of health care costs, as we have recently noted. If costs per enrollee in Medicare and Medicaid continued to grow at the same rate as they have over the past four decades, federal spending on those two programs alone would increase from about 5% of the gross domestic product today to about 20% by 2050 — roughly the share of the economy now accounted for by the entire federal budget. Compounding the challenge for policymakers is the difficulty of controlling federal spending over the long term without addressing the underlying forces behind the increase in both private and public health care costs.

A variety of evidence, however, suggests that there are opportunities to constrain health care costs without incurring adverse health consequences. One approach that could reduce total health care spending (rather than simply reallocating it among different sectors of the economy) involves generating more information about the relative effectiveness of medical treatments and enhancing the incentives for providers to supply, and consumers to demand, effective care.

There is also an interview (audio) with one of the authors, Peter Orszag.


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