Future Budget Deficits Almost Entirely Due to Rising Private Sector Health Care Costs

Source: Center for Economic and Policy Research, Press Release, August 12, 2009

If the U.S. can get private health care costs under control, federal budget deficits will not rise uncontrollably in the future, according to an updated analysis released today by the Center for Economic and Policy Research (CEPR).

CEPR’s interactive Health Care Budget Deficit Calculator allows users to see that the bulk of projected U.S. budget deficits would disappear if the U.S. had the same per person health care costs as any of 30 other countries, all of which enjoy longer life expectancies than the U.S.

“The U.S. health care system is possibly the most inefficient in the world. We spend twice as much per person on health care as other advanced countries, but we have worse health outcomes, including a lower life expectancy,” said Dean Baker, CEPR co-director. “Without health care cost containment, such as allowing Medicare and a public option to negotiate directly with drug companies, it will be almost impossible to prevent exploding future budget deficits.”

The U.S. government pays for approximately half of the country’s health care – almost all of which is actually provided by the private sector – through programs like Medicare and Medicaid. Thus, the bulk of our projected rising budget deficits are due to skyrocketing health care costs.

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