By Joseph Antos, AEI and Alice M. Rivlin, Brookings
This paper was prepared as part of a Concord Coalition project on fiscally responsible economic growth. Generous financial support was provided by Jeff Fox, Chairman and CEO of Harbour Group, St. Louis Missouri.
For a full version of the paper click here.
For a summary of the paper release event click here.
Health spending is the largest component of the federal budget. Left unchecked, federal health spending is expected to double over the next decade. A similar sharp increase is projected for consumers, employers, and state governments. A viable agenda for growing the economy must include policies to control the growth of health care spending while promoting access to affordable, quality health care and better health outcomes. Otherwise, there is a big risk that much of the federal budget and the economy’s future growth will be absorbed by an excessively costly health system without appreciable gains in health. Controlling costs will require a comprehensive approach that addresses the root causes of high spending. It must increase competitive pressures on health care prices, both from the demand- and supply-sides, allowing pressure from patients to help control costs.
This paper details how to arm purchasers – consumers, physicians, insurers, employers, and the government – to make cost-effective decisions in a competitive market environment. Key elements include: promoting competition among health care providers and insurers to lower health care prices; improving information on prices and outcomes to help patients and their physicians make more cost-effective decisions; shifting to new ways of paying for health care that promote efficiency, innovation, and better outcomes; and recognizing the appropriate and necessary role of regulation where markets are not workable.