Check out historical Federal tax receipts as a percent of GDP [1]. It looks like median is around 18% of GDP and it's been that way pretty much since the 50s. For recent history, Bush years ranged 15.6% - 20%, Obama years it started at 14.6% but is estimated to be coming back to around 18% by this year. In the last 16 years, we saw both the highest collections as a percentage of GDP (20% in 2000), and the lowest since 1950 at 14.6% from 2009-2010. Also from a 2.3% surplus in 2000, to incredible deficits from 2009 - 2012.

Looking at the total amount collected, combining the policy shifts (the % of GDP collected) and economic growth (the actual GDP) -- total receipts in 2009 was $2.1 trillion, but 2016 is projected to be $3.1 trillion -- almost a 50% increase! So what this tells me is policy and growth together can have a tremendous impact even in a relatively short time window, and taxation has also increased already very significantly as of late. Of course, even with a cool extra Trillion dollars coming in, we still manage to spend it all and more. (What the heck are we spending an extra trillion dollars on anyway?!)

The only way benefits can continue to grow without taxation increasing is if we can get more value for the same dollars. That's why I think the "solution" if there can be one, must come in the form of a radical reduction in cost somewhere. For example, total spending (not just government) on healthcare is about 18% of GDP now. When we talk about welfare, healthcare is a huge component of overall welfare spending, and if you can decrease not just Medicare/Medicaid but overall healthcare cost (better results for less dollars) you provide a lot of value to everyone. I think more effective than trying to figure out how to tax at 20%+ of GDP (and to sien's point about Hauser's law, is probably not even possible without a fundamentally different mode of taxation like VAT), we need to figure out how to achieve massive productivity gains in healthcare.

An easy place to start is always to blame someone else... Well, the rest of the world is certainly reaping huge savings off the largess of American healthcare spending. And to some extent I'd say that's a very good thing, new life-saving medicines is one of the best ways that American prosperity can positively impact the rest of the world. Probably it's not sustainable at current levels (as assessed by American %GDP healthcare spending vs. other developed nation averages). And some savings could be gleaned from figuring out better ways to cost-share with the rest of the world better, but the gains from that alone wouldn't be nearly big enough. We need to find much more cost effective ways to research, develop, and practice medicine.

So then you turn to how can we achieve savings through medical technology... But it seems like medical technology over the last decades just drives increasing costs (is there good data on this?). Certainly spending overall has increased quite consistently, but I assume much of that is increased utilization as much as increased per-patient cost. The big question in my mind is will we see a "4th revolution" specifically in the case of medicine which could drive costs down 50-90% from current levels. Perhaps this is "slaying the dragon" [2] thinking and, in the context of the article is one of those "50+ years out" unpredictable events. In the shorter-term, maybe we could start to see more robotics/automation in the long-term/elderly care segments, that type of thing... Or as our ability to sequence and customize medicine based on genetics continues to develop, I hear that could also serve as the foundation for large-scale increases in cost efficiency. Some argue there is a structural problem, like evergreen patents, that prevent technology from ever bending the cost curve, and that's probably true to some extent, but I feel like that's still just a peripheral issue which is easier to attack but not the root of solving the problem. Perhaps the fundamental problem is the significant negative reinforcement as better medicine extends lives of retirees driving up both 'lifetime medical costs' per capita as well as 'years of received welfare benefits' per capita -- doing "better" just drives up costs even more!

[1] - http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Doc...
[2] - http://www.nickbostrom.com/fable/dragon.html

P.S. http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1361028/

The Lifetime Distribution of Health Care Costs - Principal Findings

Per capita lifetime expenditure is $316,600, a third higher for females
($361,200) than males ($268,700). Two-fifths of this difference owes to women's
longer life expectancy. Nearly one-third of lifetime expenditures is incurred
during middle age, and nearly half during the senior years. For survivors to
age 85, more than one-third of their lifetime expenditures will accrue in their
remaining years.

Conclusions

Given the essential demographic phenomenon of our time, the rapid aging of the
population, our findings lend increased urgency to understanding and addressing
the interaction between aging and health care spending.