Fiscal Crisis Looms for US Healthcare Programs
As Hillary Clinton and Barack Obama debate the merits of their respective healthcare proposals, one fact is inescapable. Whoever occupies the White House next will be forced to address the ballooning costs of the existing Medicare and Medicaid programs.
President George Bush’s 2009 budget calls for reducing the growth of federal outlays for these schemes, but does not address the underlying causes of rising healthcare costs, Oxford Analytica says in a new report.
Federal, state and local governments already finance approximately 45% of national healthcare spending: federal spending on Medicare and Medicaid combined currently represents 4% of GDP, OxAn points out in Healthcare schemes face fiscal crisis.
The Congressional Budget Office’s (CBO’s) 2007 projections imply that federal spending on Medicare and Medicaid will grow to 12% of GDP in 2050 and 19% in 2082. To put these estimates in perspective, total US federal spending at the moment is roughly 20% of GDP.
Under the CBO’s most reasonable assumptions about these issues, a permanent fiscal deficit brought on by Medicare and Medicaid spending is forecast to start as early as 2010.
[According to a new paper published by policy journal Health Affairs, Medicaid spending is expected to grow at an average rate of 7.9% per year, and to increase as a share of national health spending from 14.8 % in 2006 to 16.8% in 2017. ]
While potential solutions are politically unpopular, OxAn says “the current rate of Medicare and Medicaid spending growth, driven by the rising underlying cost of healthcare, is unsustainable.”
No significant reform measures will be politically feasible this year, but the next president will be forced to confront the issue by the end of his or her first term in 2013.
Illustrating the difficulty in messing with these programs, the Center on Budget and Policy Priorities objects to regulatory changes that would cut $15 billion from federal spending on Medicaid over the next 5 years. The Center claims the changes would simply shift costs to the states and/or reduce the quality of healthcare.
The New York Times looks at the healthcare proposals of the two remaining Democratic Presidential candidates. In particular it examines the key point of difference: whether health insurance should be mandatory.
Managed Care Matters, a blog by healthcare consulting firm Health Strategy Associates, concludes that both Clinton’s and Obama’s plans would help control costs, with little difference between the two.
But, and here’s the ‘big but’, the Dems do have plans, while McCain’s is not much more than more of the same.
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