Health Care Spending and the Long-Run Fiscal Outlook

by Benedic N. Ippolito 

National health expenditures have risen faster than inflation or economic output for two years in a row, reaching $5.3 trillion in 2024. This creates a particularly notable challenge for federal policymakers due to the federal government’s increasing share of spending, which has grown from 32 percent to nearly 50 percent since the late 1980s.

Costs associated with major health care programs are forecasted to be the biggest contributor to the long run fiscal imbalance outside of interest payments. Given the scale of expenditures, even modest constraints on growth generate significant savings.

Federal policymakers have a wide variety of reform options to address spending that is not reflective of value. Options include policies that that increase competition, reduce inappropriately high prices in public programs, constrain the use of low-value services in Medicare, reform Medicare Advantage payment rates and oversight, along with many others.

Read the full testimony here…

https://www.aei.org/research-products/testimony/reverse-the-curse-skyrocketing-health-care-costs-and-americas-fiscal-future/