Good Medi­care news may not be good enough

Modern Healthcare - - THE WEEK AHEAD - —Me­lanie Evans

Pol­i­cy­mak­ers will be watch­ing for a re­peat of last year’s good news when the Medi­care trustees re­lease their an­nual re­port to Congress on July 28.

Even if the re­cent spend­ing slow­down con­tin­ues, econ­o­mists warn the trade-offs nec­es­sary to ac­com­mo­date Medi­care’s growth as baby boomers move into the pro­gram will be dif­fi­cult. Econ­o­mists at the Al­tarum In­sti­tute warn that fed­eral health­care spend­ing would need to grow 1 per­cent­age point slower than the econ­omy for tax rev­enue to re­main less than 20% of the U.S. gross do­mes­tic prod­uct. The al­ter­na­tives are tax in­creases, cuts to de­fense, ed­u­ca­tion and trans­porta­tion, or both, Al­tarum econ­o­mists wrote last year.

“It may not be pos­si­ble to get (health­care spend­ing) low enough to avoid that dilemma,” Charles Roehrig, an econ­o­mist who over­sees the Al­tarum Cen­ter for Sus­tain­able Health Spend­ing, said ahead of the new trus­tee re­port.

Health­care spend­ing has his­tor­i­cally ex­ceeded eco­nomic growth. Per capita, it grew 1.9 per­cent­age points faster than eco­nomic growth, on av­er­age, from 1975 and 2011, ac­cord­ing to fed­eral es­ti­mates.

There’s “a siz­able fi­nanc­ing short­fall” in the fed­eral bud­get even with­out health­care growth ex­ceed­ing eco­nomic growth, Wil­liam Gale, a Brook­ings econ­o­mist, said in April. “If we can­not get health­care spend­ing un­der con­trol, or keep it un­der con­trol, de­pend­ing on your per­spec­tive of what’s go­ing on, there’s no hope for the fed­eral bud­get.”

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