Restoring Fiscal Sanity 2007: The Health Spending Challenge

Transcript

ALICE RIVLIN: Good morning. Thank you for coming. I'm Alice Rivlin, and it is my pleasure to welcome you not only to the Brookings Institution, but to our forum on Restoring Fiscal Sanity, the Health Spending Challenge. We are launching a new book today. This is the third in our series called Restoring Fiscal Sanity. We think it has not happened yet, so we are trying again.

The first book dealt with the shorter-run fiscal crisis in the federal budget. The second one showed very clearly that the long-run problem was largely a health care problem, that the problem of controlling federal deficits over the next several decades is dominated by health spending. So we decided to devote this book to the challenge of rising health spending.

But the challenge is not just a federal budget challenge. Health care spending increasingly dominates all of our budgets; states, localities, companies, universities, think tanks, families, whatever, it is the big challenge. Americans are spending a rising proportion of everything we produce on health care at every level. We spend almost 17 percent of our GDP right now. That is likely, according to the Council of Economic Advisers, to rise to 20 percent or more in less than a decade, perhaps on to 25 or 30 or who knows after that.

That is not surprising and it is not necessarily bad. Medical care is much more effective than it used to be. We are healthier and we are living longer partly as a result of better medical care. As incomes rise, we want to spend more on health care. But this rising spending does raise two very important questions which we will be dealing with for a long time in this country. First, how can we be sure that we are getting our money's worth, and how can we divide the cost, who is going to pay and how?

View Full Transcript »