National health spending is projected to contin- ue to grow faster than the economy, increasing from 18% to about 25% of the gross domestic product (GDP) by 2037.1 Federal health spending is projected to increase from 25% to approxi- mately 40% of total federal spending by 2037.1 These trends could squeeze out critical invest- ments in education and infrastructure, contrib- ute to unsustainable debt levels, and constrain wage increases for the middle class.2,3
Although the influx of baby boomers will in- crease the number of Medicare beneficiaries, growth in per capita health costs will increas- ingly drive growth in federal health spending over the long term.1 This means that health costs throughout the system drive federal health spend- ing. Reforms that shift federal spending to indi- viduals, employers, and states fail to address the problem. The only sustainable solution is to con- trol overall growth in health costs.
Although the Affordable Care Act (ACA) will significantly reduce Medicare spending over the next decade,4 health costs remain a major chal- lenge. To effectively contain costs, solutions must target the drivers of both the level of costs and the growth in costs — and both medical prices and the quantity of services play important roles. n engl j med
Solutions will need to reduce costs not only for public payers but also for private payers. Finally, solutions will need to root out administrative costs that do not improve health status and outcomes.
The Center for American Progress convened leading health-policy