There is broad agreement that historical rates of increase in health spending are “unsustainable”, and we must therefore find ways to bend the health care cost curve. However, there is surprisingly little consensus – and not even much being written – about what growth rate would be “sustainable”? Defining sustainable growth and establishing a credible target is one of the top research priorities of our Center. We have put a lot of energy into providing more timely estimates of health spending and having a target for comparison is a key next step.
In this blog, the first in a planned series, I lay the groundwork needed to estimate sustainable health spending growth rates. I begin with a definition of sustainable health spending that I hope you will find intuitively appealing, even if it does not match your own perspective. I then identify key stakeholders affected by health spending increases and who, in the absence of the Affordable Care Act (ACA), would have their own particular sustainability thresholds. Next, I argue that under ACA, the federal government blunts the impact of health spending growth on most other stakeholders and, in so doing, focuses the sustainability question more fully on its ability to raise the tax dollars required to meet its ACA commitments.
Defining “sustainable” health spending
I consider the nation to have achieved sustainable health spending when the projected growth path of spending is within what the nation is willing and able to pay. Note that this definition introduces elements of choice into the determination of sustainability. If there is an absence of willingness to pay, the spending will be unsustainable even if there is ability to pay.
Filed Under: Health PlansTagged: Affordable Care Act, GDP, Health care spending, sustainable growth rate Dec 29, 2011