Forecasts on Healthcare 2028This is a featured page

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A. The Projections of the Congressional Budget Office: The Expected Future

The Congressional Budget Office made projections of the future spending on health care in the U.S. These projections were based on the absence of changes in federal law, and were based on the historical growth rate of health care spending, including federal spending on Medicare and Medicaid.

  • Total spending on health care in the U.S. would rise from 16% of the GDP in 2007 to 25% of the GDP in 2025, 37% in 2050, and 49% in 2082.
  • Federal spending on Medicare and Medicaid would rise from 4% of the GDP in 2007 to 7% of the GDP in 2025, 12% in 2050, and 19% in 2082.
Assumptions of the CBO's projections:
  • These projections assume no changes to the federal laws governing Medicare and Medicaid spending.
  • For the long term, the projections assume the rise in health care costs would cause employers and employees to alter their behavior - employers are assumed to increase employee contributions, reducing coverage, and increasing out-of-pocket charges. Employees are assumed to either shift to lower-premium plans or to limit their use of health insurance. These assumptions are added into the projections because the use of historic growth rates alone would eventually allow health care spending to exceed GDP.

B. Alternative Futures for Health Care

Alternatives based on COST:
On either side of the CBO's projections are two alternative: a worst-case scenario and a best-case scenario.
In the worst-case scenario, in which the medical expenditures grow 2.5% or more over the growth of the GDP, medical costs spiral up and out of control, forcing many employers to drop employee coverage, massive cuts in Medicare and Medicaid spending, and public hospital and clinic closures as they go unpaid.

The worst-case scenario would likely have much wider implications than just the health care industry. Employers that could or would not drop employee coverage would face huge costs that could potentially cripple them. Insurance companies could face massive costs as payments rise, resulting in either huge losses or dropped customers. State governments would be strapped with growing Medicaid costs. Personal debt would rise as people turn to credit cards to pay for health care.

In the best-case scenario, in which health care costs increase more slowly than the overall rate of GDP growth, health care costs become manageable, and spending falls as a percentage of incomes and the GDP.

Alternatives based on COVERAGE:
According to the Institute of Medicine of the National Academy of Sciences, the U.S. is the only wealthy, industrialized nation that does not provide universal health care coverage for all its citizens. Universal health care coverage is a term that encompasses many different kinds of programs, from tax-funded automatic coverage for every citizen, to mandatory insurance coverage.

Examples of health care programs in other countries:
  • Canada -The Canadian system is for the most part publicly funded, yet most of the services are provided by private enterprises or private corporations, although most hospitals are public. Most doctors do not receive an annual salary, but receive a fee per visit or service. About 30% of Canadians' health care is paid for by the private sector or individuals. This mostly goes towards services not covered or only partially covered by Medicare such as prescription drugs, dentistry and vision care. Many Canadians have private health insurance, often through their employers, that cover these expenses.
  • England - The National Health Service provides the majority of health care in England, including primary care, in-patient care, long-term health care, ophthalmology and dentistry. The National Health Service Act 1946 came into effect on 5 July 1948, and is considered the world's first universal health care system provided by government. With the exception of small subsidized charges for prescriptions, dentistry and ophthalmology (which themselves are free to children, the elderly, the unemployed and those on low incomes), all treatment is free. Private health care has continued parallel to the NHS, paid for largely by private insurance, but it is used by less than 8% of the population, and generally as a top-up to NHS services.
  • The Netherlands -The Netherlands has a dual-level system. All primary and curative care (i.e. the family doctor service and hospitals and clinics) is financed from private compulsory insurance. Long term care for the elderly, the dying, the long term mentally ill etc. is covered by social insurance funded from taxation. According to the WHO, the health care system in the Netherlands was 62% government funded and 38% privately funded as of 2004.
  • Germany - Germany has the world's oldest universal health care system, with origins dating back to Otto von Bismarck's Health Insurance Act of 1883. As mandatory health insurance, it originally applied only to low-income workers and certain government employees, but has gradually expanded to cover virtually the entire population. Currently 85% of the population is covered by a basic 'Statutory Health Insurance' plan, which provides the standard level of coverage. The remainder opt for private health insurance, which frequently offers additional benefits. According to the World Health Organization, Germany's health care system was 77% government-funded and 23% privately funded as of 2004.
  • Finland - In Finland, public medical services at clinics and hospitals are run by the municipalities (local government) and are funded 76% by taxation, 20% by patients through access charges, and 4% by others. Private provision is mainly in the primary care sector. There are very few private hospitals. The main hospitals are either municipally owned (funded from local taxes) or run by the medical teaching universities (funded jointly by the municipalities and the national government). According to a survey published by the European Commission in 2000, Finland's is in the top 4 of EU countries in terms of satisfaction with their hospital care system: 88% of Finnish respondents were satisfied compared with the EU average of 41.3%. Finnish health care expenditures are below the European average. The private medical sector accounts for about 14 percent of total health care spending. Only 8% of doctors choose to work in private practice, and some of these also choose to do some work in the public sector.
Common arguments forwarded by supporters of universal health care systems include:
Common arguments forwarded by opponents of universal health care systems include:
  • Health care is a basic human right or entitlement.
  • Ensuring the health of all citizens benefits a nation economically.
  • About 60% of the U.S. health care system is already publicly financed with federal and state taxes, property taxes, and tax subsidies - a universal healthcare system would merely replace private/employer spending with taxes. Total spending would go down for individuals and employers.
  • A single payer system could save $286 billion a year in overhead and paperwork.
  • Administrative costs in the U.S. health care system are substantially higher than those in other countries and than in the public sector in the US: one estimate put the total administrative costs at 24 percent of U.S. health care spending.
  • Several studies have shown a majority of taxpayers and citizens across the political divide would prefer a universal health care system over the current U.S. system.
  • Universal health care would provide for uninsured adults who may forgo treatment needed for chronic health conditions.
  • Wastefulness and inefficiency in the delivery of health care would be reduced.
  • America spends a far higher percentage of GDP on health care than any other country but has worse ratings on such criteria as quality of care, efficiency of care, access to care, safe care, equity, and wait times, according to the Commonwealth Fund.
  • A universal system would align incentives for investment in long term health-care productivity, preventive care, and better management of chronic conditions.
  • Universal health care could act as a subsidy to business, at no cost thereto. (Indeed, the Big Three of U.S. car manufacturers cite health-care provision as a reason for their ongoing financial travails.
  • The profit motive adversely affects the cost and quality of health care.
  • A 2008 opinion poll of 2,000 US doctors found support for a universal healthcare plan at 59%, which is up from 49% in 2002. The reasons given are an inability of doctors to decide patient care and patients who are unable to afford care.
  • In countries in Western Europe with public universal health care, private health care is also available, and one may choose to use it if desired. Most of the advantages of private health care continue to be present.
  • Health care is not a right. As such, it is not the responsibility of government to provide health care.
  • If universal health care is provided by federally mandated purchase of health insurance, it may be unconstitutional, since the Constitution does not give the federal government this right and reserves all non-mentioned rights to the States or the People.
  • Universal health care would result in increased wait times, which could result in unnecessary deaths.
  • Unequal access and health disparities still exist in universal health care systems.
  • Universal health care would reduce efficiency because of more bureaucratic oversight and more paperwork, which could lead to fewer doctor-patient visits. Advocates of this argument claim that the performance of administrative duties by doctors results from medical centralization and over-regulation, and may reduce charitable provision of medical services by doctors.
  • Many problems that universal health insurance is meant to solve are presumed caused by limitations on the free market. As such, free market solutions have greater potential to improve care and coverage.
  • The federal Emergency Medical Treatment and Active Labor Act requires hospitals and ambulance services to provide emergency care to anyone regardless of citizenship, legal status or ability to pay. The health care safety net, which includes free medical clinics, charity care, nonprofits and government-run community hospitals, provides necessary care to the uninsured.
  • The widely quoted health care system ranking by the World Health Organization, in which the US system ranked below other countries' universal health care systems, used biased criteria, giving a false sense of those systems' superiority.
  • Empirical evidence on the Medicare single payer-insurance program demonstrates that the cost exceeds the expectations of advocates. As an open-ended entitlement, Medicare does not weigh the benefits of technologies against their costs. Paying physicians on a fee-for-service basis also leads to spending increases. As a result, it is difficult to predict or control Medicare's spending.
  • Universal health care systems, in an effort to control costs by gaining or enforcing monopsony power, sometimes outlaw medical care paid for by private, individual funds.

C. The Future of Employee Health Benefits

The Economist just published an article that describes how a proposal to tax employer-provided health benefits as ordinary income could radically change the landscape of health coverage in the United States. Individuals would then seek coverage in many different forms--some provided by government, some by employers, some purchased on the open market.



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