Posted 2/3/12 on the Health Affairs Blog
©2012 Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.
As we embark upon a presidential campaign season, we can anticipate many lively debates on the topics of taxation and spending in this nation. As health spending in the Unites States accounts for 18 percent of our gross domestic product – a rate often called unsustainable – it is critical that we be clear-eyed in our understanding of the tradeoffs between tax revenues and a sustainable rate of national health spending.
Few have tried to paint a comprehensive scenario of what a sustainable rate of health spending might look like in the United States. That is what the research team at Altarum institute’s Center for Sustainable Health Spending has endeavored to do in this article. Only by having a well researched and objective picture of sustainable spending growth can we set measurable targets and track progress toward reaching what should be a national goal of this highest priority.
In an earlier blog on Altarum Institute’s Health Policy Forum, I defined sustainable health spending as a projected growth path of spending that is within what the nation is willing to pay. I argued that, under the Affordable Care Act (ACA), the protections provided by the federal government reduce the effects of health spending growth on other stakeholders. (See note 1) Consequently, the sustainability of a given rate of health spending growth largely rests with the federal government’s ability to meet its various health spending commitments, including those added under the ACA. This, in turn, rests upon the willingness of the citizenry to allocate the necessary tax revenues. Given the inherent uncertainties regarding the public willingness to pay future taxes, this research is partly hypothetical, but I think it provides insights into the tradeoffs between tax revenues and health spending that contribute to informed decisions about targets for taxes and health spending.