Projecting OECD health and long-term care expenditures: What are the main drivers?
Organisation for Economic Co-operation and Development (OECD)
ECO/WKP(2006)5
February 3, 2006
Rising expenditure on health and long-term care is putting pressure on government budgets in most OECD countries. Going forward, these pressures will add to those arising from insufficiently reformed retirement schemes. The question is how much health and long-term care spending could increase in the future and what policy can do about it. This paper presents a framework for thinking about that question and provides some quantitative illustrations. Both changing demography and non-demographic drivers of spending are taken into account.
The paper shows that spending on health and long-term care is a first-order policy issue. Between now and 2050, public spending on health and long-term care could almost double as a share of GDP in the average OECD country in the absence of policy action to break with past trends in this area. And that estimate takes into account that as people live longer, they also remain in good health for longer. Even with containment measures, public spending on health and long-term care could rise from the current average level of 6-7 % of GDP to around 10% by 2050. In some countries, the increase could be dramatic.
http://www.oecd.org/dataoecd/57/7/36085940.pdf
And…
Ask the White House
Al Hubbard, Director of the National Economic Council
The White House
February 14, 2006
The government provides a health care safety net for the poor, elderly, and disabled. Of the almost two trillion dollars of annual health care spending in the U.S., the government now pays for almost half. If the government were to take over financing another trillion dollars of health care for the non-poor who currently buy their own health care and insurance, there would have to be a massive tax increase. A tax increase of this size could significantly damage the economic growth that is so important for creating jobs and wealth for the American people.
http://www.whitehouse.gov/ask/20060214.html
Comment: By Don McCanne, M.D.
The OECD classifies the increase in government spending on health care as a “first-order policy issue.” They predict that, even with unspecified spending containment measures, demographic and non-demographic drivers of spending will result in average government costs of 10 percent of GDP in OECD nations. At least in this report, they do not seem to be concerned about increases in private spending.
Al Hubbard says that the $1 trillion in private funds that are being spent on health care would damage economic growth if that financing were to be administered by the government through the tax system. Even the OECD concedes that governments are more efficient administrators of health care funds. When total health care spending would remain the same, why should Mr. Hubbard believe that public health care spending would damage the economy whereas private health care spending is considered to be beneficial for the economy?
Maybe instead of relying on his logic, he was simply expressing the dogmatic ideology of this administration. A not so subtle hint of his views was expressed in his answer to a question as to whether he sees a time when America does have a universal health care system. His answer, “I certainly hope not.”