Health Care Management Papers

Document Type

Conference Paper

Date of this Version


Publication Source

Wharton Health Care Management


The rate of growth in medical spending in the United States and most other developed countries is high most of the time, and is commonly higher (over the long term) than the rate of growth in GDP. Because much of medical spending affects and is affected by government spending and taxation, the growth in this share of consumption expenditures is both more important for fiscal policy and raises more potential problems than consumer spending growth in other sectors of the economy. Given the growing importance of the major federal programs Medicare and Medicaid in the US budget, and the impending health reform expansion in Medicaid eligibility and insurance subsidies for Exchanges, federally-financed spending growth has developed a major challenge to present and future fiscal stability. In addition, the strong role played in private insurance markets by federal tax, spending, and regulatory policy means that even private spending growth is a matter of fiscal policy concern. We know there is a problem, and that current policies are not sustainable. But designing solutions that will do more good than harm requires both a clear idea of the causes of the problem and a precise and politically feasible articulation of our social goals concerned with medical care use, health insurance protection, and health outcomes of Americans. In this paper I will describe the problem and talk about solutions.


This is a conference paper presented at "Defusing the Debt Bomb: Economic and Fiscal Reform" that took place from October 6-11, 2011 at the Baker Institute for Public Policy, Rice University. This version is an updated and revised draft from November of 2011.



Date Posted: 27 November 2017