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New Health Spending Report Proves That Only Reform Can Save US From ‘Government Takeover’ Of Health Care

By Igor Volsky  

"New Health Spending Report Proves That Only Reform Can Save US From ‘Government Takeover’ Of Health Care"

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David Broder argues that Democrats need to reform the health care system to reduce the deficit and stabilize the economy. Walking away from reform would “only dig us into a deeper deficit,” he writes. It’s an argument Democrats themselves used to make in 2009, before they pivoted towards jobs and the economy and left health reform in the dust.

But today, a new report published in Health Affairs finds that if Congress doesn’t do anything to reduce health care costs, by 2020, “about one in five dollars spent in the U.S. will go to health care, a proportion far beyond any other industrialized nation.” “For the first time, government programs next year will account for more than half of all U.S. health-care spending.” The new analysis flips the conservative narrative. It’s not that health care reform will result in a government take over of the health care system. The truth is, reform that slows the rate of growth in health care spending would reduce the government’s investment in the system.

Health care spending “grew to a record 17.3% of the U.S. economy last year,” the report found, “marking the largest one-year jump in its share of the economy since the government started keeping such records half a century ago.” Increased enrollment in Medicare and Medicaid as well as a decrease in the number of people with private insurance accounted for much of the growth in health care spending:

- U.S. health spending hit $2.5 trillion in 2009, up 5.7% from the previous year. That represents 17.3% of GDP, up from 16.2% in 2008.

- Public spending on health care will rise to 50.4% by 2011. Last year, the federal actuaries had predicted the 50% mark wouldn’t be reached until around 2016.

- Total health spending is expected to grow increasingly faster each year after bottoming out in 2010, reaching 7.0 percent by 2016

- For 2009–2019, health spending is expected to grow at an average annual rate of 6.1 percent (1.7 percentage points faster than GDP) and to climb to $4.5 trillion by 2019

At the end of last year, Jonathan Cohn made this chart comparing the annual rate of change in health care spending under the Senate health care bill and the rate of change under the status quo. The message is clear: Democrats who fail to act on health care reform are placing the country on the blue trajectory:

DoesThisCurveBend2

As The Kaiser Family Foundation’s Larry Levitt explained, “[r]eform lowers the rate of growth of health spending for a few years, primarily with Medicare savings. Then the rate of growth jumps up above baseline as the uninsured are brought into the system (the effect is really a one time increase in spending, but it shows up as big rates of growth for a few years as the uninsured are covered and use more services). Then things settle down back to the point where the rate of growth is below baseline, reflecting the effect of Medicare savings and the tax on high cost insurance plans.”

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