Big Benefits: A look at the relationship between benefits, usage and costs



Key Take Aways
The conclusions in our BIG BENEFITS presentation, include…
• Benefit payments for health care in America are paid at or after time of service by a variety of different entities and are financed in a variety of different ways.
• The public tax-supported program enrollment and payment criteria do not meet the basic risk management criteria historically required by private insurance programs.
• The public tax-supported program enrollment and payment criteria do not meet basic sustainability criteria historically required by private insurance programs.
• Health Care Services and related costs are driven, if not determined, by the nature of the care required”.
• The allocation and distribution of payment of “benefits” has led to a series of use-driven distortions in America’s health care system.

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American Health Care: Health Spending and the Federal Budget - From the Committee for a Responsible Federal Budget
The United States spends more on health care than any other country in the world, and a large share of that spending comes from the federal government.

In 2017, the United States spent about $3.5 trillion, or 18 percent of GDP, on health expenditures - more than twice the average among developed countries.

Of that $3.5 trillion, $1.5 trillion, is directly or indirectly financed by the federal government. In other words, the federal government dedicates resources of nearly 8 percent of the economy toward health care. By 2028, we estimate these costs will rise to $2.9 trillion, or 9.7 percent of the economy. Over time, these costs will continue to grow and consume an increasing share of federal resources.

Over the long term, the rising cost of federal health care spending is clearly unsustainable. Without a course correction, the result will be program insolvency, crowding out of important public priorities, and a growing federal debt.

Given how central health care spending is to the federal budget, it is important to understand how that spending is distributed and how it will grow. This paper will provide background on major health care programs in the federal budget. It is the first in a series called the American Health Care initiative, a joint collaboration of the Committee for a Responsible Federal Budget and the Concerned Actuaries Group.

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