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CBO: Health Care Could Consume Half Of GDP By 2082

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If federal laws stay the way they are today, total spending on health care could increase to 49% of gross domestic product in 75 years, up from 16% this year.

Researchers at the Congressional Budget Office make that prediction in a report on the long-term outlook for U.S. health care spending.

If researchers simply extrapolate using the recent Medicare and Medicaid spending growth rates, “that approach…allows the economic impossibility of having health care spending eventually exceed total national income,” the CBO researchers write in the report.

In that scenario, health care spending would equal about 99% of GDP by 2082, the researchers estimate.

Even assuming that changes in state policies, federal regulations and other factors compensate for an inability to change federal law, health care spending still could end up increasing much faster than the overall inflation rate, the researchers write.

Medicare spending probably would increase even faster than the Medicare trustees have been predicting, the researchers warn.

In the long run, the researchers note, the aging of the population would account for only about 10% of the growth in spending.

The rest of the increase would come from factors such as advances in technology.

The CBO researchers emphasize in the report that analysts trying to estimate 2007 health care costs back in 1932 would have had a difficult time doing so, and that changes in health care technology, health care financing systems and society as a whole could easily throw off projections for 2082.

But any continuing increases in health care spending probably would hurt poor people more than high-income people, because poor people have less discretion over health care spending and other spending, the researchers write.

In some cases, poor people might end up getting less health care than they need, or they might have to accept getting lower-tech care than higher-income people receive, the researchers write.

Senate Finance Committee Chairman Max Baucus, D-Mont., responded by saying he will release a schedule for an extensive series of hearings on health care costs and reform in January 2008.

“Rising health care costs are clearly at the root of our country’s long-range budget problems,” Baucus says.

The key to solving the country’s future fiscal difficulties is to address the reasons for rising health care costs, rather than simply changing Medicare and Medicaid spending choices, Baucus says.


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