CRFB Releases New Health Care Paper

Today, CRFB released its newest paper outlining options for controlling federal health care costs. Federal health spending is projected to grow at a high rate and threaten the fiscal health of our economy. According to CBO, net federal health care spending will rise from $750 billion in 2012 to $1.6 trillion in 2022, about 4.9 percent and 6.7 percent of GDP respectively. Over the longer term, it will rise even further--possibly to 9 percent of GDP by 2035 and 11 percent by 2050.

In this paper, we lay out a number of policy options to achieve savings and classify them into three categories: savers, curve benders, and fundamental reforms. 

  • Savers reduce federal health expenditures and include proposals such as reducing provider rates, expanding drug rebates to Medicare Part D, and raising the Medicare age.
  • Curve benders attempt to slow health spending growth, for example, by reforming cost-sharing rules, encouraging wellness, and changing the tax treatment of health insurance.
  • Fundamental reforms change the way health care is administered and financed through ideas such as transforming Medicare into premium support, establishing a single payer system, or creating a federal budget for health care. 

As we say:

In all likelihood, health reform will be a continued process where policymakers must constantly work to find new efficiencies and changes over time. Given the country’s current and projected fiscal state, policymakers must begin now to enact as much savings as reasonably possible to begin to slow the growth of federal health spending and put the country on a stronger fiscal path.

Click here to read the full report on health care savings options.