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The Honolulu Advertiser
Posted on: Monday, December 22, 2008

Healthcare costs threaten economy

By Julie Appleby
USA Today

Rising healthcare costs "pose a serious threat" to the economy, but some of the more popular cost-control policies promoted by lawmakers will do little to help, warn government reports released last week.

No simple solutions exist, but unless changes are made, the nation will spend 25 percent of its total economy on healthcare by 2025, up from about 16 percent now, the Congressional Budget Office says in two reports that do not make policy recommendations.

In addition, the number of uninsured could jump 20 percent in 10 years, up from about 45 million in 2009 to 54 million, the CBO says.

Some plans promoted by President-elect Barack Obama and many other lawmakers — such as wide adoption of electronic health records and better preventive care — could improve health but would likely result in only modest savings or even increase the federal government's costs over 10 years, the CBO says.

In contrast, reducing payments to doctors, hospitals and other medical providers — highly unpopular politically — would save hundreds of billions of dollars over 10 years, the CBO says.

The reports could help shape debate next year in Congress and the White House, particularly because one of the forces behind them is Peter Orszag, who was CBO chief until Obama tapped him to be budget director.

"He's now in a position in the administration to convince them to focus on things that address health spending in the long run," says Paul Ginsburg, an economist with the nonpartisan Center for Studying Health System Change.