Slower cost growth would have ramifications far beyond the deficit. According to calculations by White House economists, slowing the annual growth rate of health care costs by 1.5 percentage points might increase economic output by 2 percent in 2020 and 8 percent in 2030. It might also lead to higher wages for workers and more room for productive investments in the budget.
A sharp and surprisingly persistent slowdown in the growth of health care costs is helping to narrow the federal deficit, leaving budget experts trying to figure out whether the trend will last and how much the slower growth could help alleviate the country’s long-term fiscal problems.
In figures released last week, the Congressional Budget Office said it had erased hundreds of billions of dollars in projected spending onMedicare and Medicaid. The budget office now projects that spending on those two programs in 2020 will be about $200 billion, or 15 percent, less than it projected three years ago. New data also show overall health care spending growth continuing at the lowest rate in decades for a fourth consecutive year.
Health experts say they do not yet fully understand what is driving the lower spending trajectory. But there is a growing consensus that changes in how doctors and hospitals deliver health care — as opposed to merely a weak economy — are playing a role. Still, experts sharply disagree on where spending might be in future years, a question with major ramifications for the federal deficit, family budgets and the overall economy.
Part of the slowdown stems from “the recession and the loss of income and wealth” causing people to cut back on health care, Douglas W. Elmendorf, the director of the Congressional Budget Office, said last week. But he added that a “significant part” of the slowdown “probably arises from structural changes in the health care system.”
What do you guys think about cutting off health care budget? Do you really think it will help solve budget deficit problem?
In addition, what do you think about the government control of health care? I personally think US health care system is not good enough considering its economic strength, since it is privatized - I mean, the government doesn't have full control of health insurance, right?
In Korea, everything related to medical care is really, really cheap because insurance controlled by the government covers much more than what I have to pay. For example, just going to see a doctor to get prescription drug when you have a cold or to a dentist for regular checkup is around $3 to $6, which I guess is much cheaper than what I have to pay in US.
What do you think about privatized medical insurance? Is it for middle class? lower class? or maybe top 1%?
I don't know well enough to discuss about it, but wanted to ask your thoughts about advantage of privatization, as I heard that Korean medical system can be privatized soon due to FTA with US.
The most interesting thing I took away from this post was the notion that how doctors and health care providers are operating is driving spending downward. This is very interesting to me because I like to think that industry efficiency goes a long way to cutting costs. I had recently read that many hospitals and health care providers are still in the process of digitizing their operations. The seamless integration of digital patient charting and automated data collection I believe will continue to drive this trend in the lower cost trajectory.
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