TOP OF THE ADMINISTRATION’S AGENDA: STEM THE RISING COST OF HEALTHCARE

Reprinted with permission from Generations 40:4, Winter 2016-2017. Copyright © 2017. American Society on Aging, San Francisco, California. For electronic publication, please provide full citation, publication credit and hyperlink to ASA, www.asaging.org.

by John Rother

The rising cost of healthcare is one of the greatest economic, fiscal, and moral challenges facing the United States, not just for the next four years, but also for coming generations. Successful efforts to simultaneously improve quality and outcomes while “bending the curve” of healthcare spending must be a top national priority.

Where We Stand Today

Despite substantial progress reforming the health insurance market and reshaping healthcare delivery in the past six years, current trends are not promising for America’s older adults, or the population as a whole.

Undoubtedly, the United States has benefitted from an unexpected slowdown in health spending growth and the fact that more than 90 percent of the population is currently insured. But that fortuitous slowdown has largely ended, with spending climbing again at a rate well above inflation and wage growth, albeit not as high as historical norms. The reality is that the cost of Medicare and Medicaid will consume increasing shares of our economy and our federal budget in the years and decades ahead. Any resurgence of healthcare spending growth will only accelerate the impact of an aging population on health spending. And as Medicare costs grow, so will the premiums paid by beneficiaries, a development which will negatively affect their ability to afford care—with the greatest immediate impact on the 5 percent of beneficiaries, who generate 50 percent of healthcare spending.

In the non-Medicare population, the situation is no better. Recent analyses of the employer market and the non-group market show rising premiums and rapidly climbing deductibles.

On this trajectory, future generations of Americans will find it increasingly difficult to afford the care they need. Faced with these affordability barriers, Americans will experience higher rates of illness, disability, and early mortality than they otherwise might. Unless we act, this combination of poor health and the increasing cost of care will gradually erode our standard of living—until the security provided today by programs like Medicare, and the American dream of generational progress, both vanish under the growing burden of healthcare costs.

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