Total U.S. health expenditures (both public and private) are projected to rise to approximately one-quarter of the economy by 2040
August 17, 2015

Over the next 25 years, CBO projects that healthcare costs will rise significantly as a percentage of GDP. The fee-for-service medical system encourages quantity over quality of care, and patients are shielded from the cost of care since third-party insurers bear the majority of treatment costs. These factors encourage the development and use of expensive medical technologies, whose benefits may not be worth the extra costs. Also factoring into the high healthcare costs are poor coordination of care providers, increases in the rate of expensive chronic conditions, and increasing use of defensive medicine. Addressing the rising costs of healthcare is a central challenge in reducing the government deficit and putting America on a sustainable long-term fiscal path.

For more information, check out PGPF’s Healthcare Primer.

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Related Charts:

Federal Health Spending, 2010-2040
Medicare Spending Is a Growing Share of the Federal Budget
Medicare Spending per Beneficiary Varies Across Regions
Per Capita Health Care Costs – International Comparison
Where The Growth In Spending Comes From

Peter G. Peterson Foundation Chart Pack:

The PGPF chart pack illustrates that budget-making involves many competing priorities, limited resources, and complex issues. In this set of charts, we aim to frame the financial condition and fiscal outlook of the U.S. government within a broad economic, political, and demographic context.
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