Great News! We’re Not Doomed to Soaring Health Care Costs

It really matters who the next president is. But there are other things that matter just as much to the nation’s future prosperity. One of them is: What is happening to health care costs?

If health care costs start to rise again the way they did before, then health care spending will swallow the economy and bankrupt the federal government. If they are contained, then suddenly there’s a lot more money for everything else, like schools, antipoverty efforts and wages.

The good news is that recently health care inflation has been at historic lows. As Jason Furman, the chairman of President Obama’s Council of Economic Advisers, put it in a speech to the Hamilton Project last month, “Health care prices have grown at an annual rate of 1.6 percent since the Affordable Care Act was enacted in March 2010, the slowest rate for such a period in five decades, and those prices have grown at an even slower 1.1 percent rate over the 12 months ending in August 2015.”

As a result of the slowdown in health care inflation, the Congressional Budget Office keeps reducing its projections of the future cost of federal health programs like Medicare. As of October, projections for federal health care spending in the year 2020 were $175 billion lower than the projections made in August 2010. That would be a huge budget improvement.

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Jeffrey R. Ungvary President

Jeffrey R. Ungvary