If health care markets remain insulated from the shock, then the same size shock must be borne by an ever smaller remainder of the economy. A trend that allocates larger and larger bites of overall economic growth to health spending is not sustainable forever. A time would come when health would continually soak up all our economic growth and more, and the rest of the economy would shrink. The end of that road is an economy that spends 100 percent of its income on health. How Winners Become Losers in Budget Accounting O.K., you say, this growth in health costs is not sustainable.
Health reform is designed to achieve cost savings starting five years from now.
But I am worried about the long term implications of the five year projection and commitments that might be based on it. The difficulty centers on the politics of reform. Politicians always want to identify as few losers as possible. Accordingly, for the five year period between 1993 and 1998, many proposed plans by both Democrats and Republicans would commit the economy to spend the same amount on health as is projected under baseline assumptions. Under the President's plan, Medicare would face increased cost controls, BUT the elderly would be compensated by additional long term care and drug benefits.