American Health Care: Who Pays - A look at the allocation and management of public and private costs

Key Take Aways
In all of these presentations, we highlight the conclusions we think critical to informed discussion of health care in America and share examples of the data and research findings that support those conclusions.

When talking about Big Numbers, for example, we make the points, among others, that:
• future health care spending will require a significantly larger, and arguably unmanageable, share of both individual household and government budgets
• the options being considered for changing the Affordable Care Act do not adequately address the needs, complexity of, or financial stability required by American health care; and that
• the country can’t find the answers we need, without considering the demographics; the economic realities; and a host of equity issues including the shifting of costs to future generations.

Building on those conclusions, in the Big Benefits presentation, we made the points that
• the public tax-supported programs that account for roughly half of all health care payments do not meet basic risk management criteria and should not be viewed or managed as insurance products;
• the public programs are not financially sustainable as constituted; and that
• the allocation and distribution of payment of “benefits” has led to a series of use-driven distortions in America’s health care system, which, we concluded are “…placing a very significant burden on the cost of doing business in the United States and eroding the quality of life in this country by forcing major damaging cuts in revenues for state and local services and funds needed for education.

This article, Who Pays, requires a “Spoiler Alert,”which is that the American Health Care business model is simply not working. That conclusion is supported by the three major take aways in the article, including:
• the numbers don’t work in terms of sustainability or sufficiency;
• there are political and financial tensions in the American health care system that work against the system’s need for public awareness, accountability, and capacity to address problems in a timely manner; and,
• the distribution of services, costs, and payments on the one hand and collection of taxes, premiums and fees to fund the payments on the other does not effectively recognize or manage either the differences between insurance coverage and different types of subsidized care or the redistribution of income required to support the subsidized care!

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American Health Care: Health Spending and the Federal Budget - From the Committee for a Responsible Federal Budget
The United States spends more on health care than any other country in the world, and a large share of that spending comes from the federal government.

In 2017, the United States spent about $3.5 trillion, or 18 percent of GDP, on health expenditures - more than twice the average among developed countries.

Of that $3.5 trillion, $1.5 trillion, is directly or indirectly financed by the federal government. In other words, the federal government dedicates resources of nearly 8 percent of the economy toward health care. By 2028, we estimate these costs will rise to $2.9 trillion, or 9.7 percent of the economy. Over time, these costs will continue to grow and consume an increasing share of federal resources.

Over the long term, the rising cost of federal health care spending is clearly unsustainable. Without a course correction, the result will be program insolvency, crowding out of important public priorities, and a growing federal debt.

Given how central health care spending is to the federal budget, it is important to understand how that spending is distributed and how it will grow. This paper will provide background on major health care programs in the federal budget. It is the first in a series called the American Health Care initiative, a joint collaboration of the Committee for a Responsible Federal Budget and the Concerned Actuaries Group.

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