Health care is at the top of voters’ minds as Members of Congress head home for the August recess. Constituents are concerned about rising costs, access challenges, and quality issues, and that is making healthcare reform one of the major issues in the congressional election.

Much of the health care discussion in Washington and on the campaign trail has focused on how to reform the Affordable Care Act and/or on proposals such as providing universal access to Medicare. Given the fiscal and managerial challenges confronting our health care system, a much broader and informed discussion is required to help improve the sustainability and accessibility of our current system.

The Concerned Actuaries Group (CAG) and the Committee for a Responsible Federal Budget have joined together under a collaborative initiative, American Health Care: Rethinking the Challenges, Opportunities and Possibilities, dedicated to help energize a much needed conversation about improving the sustainability and accessibility of our health care system.

Analyses published by these organizations within the past sixty days highlight the need for voters to demand a more comprehensive discussion on how candidates address the complex fiscal and managerial challenges confronting our system. Consider the following highlights from the groups’ respective analyses:

CAG Key Findings on American health care system
(Data graphics on the following can be found here)

Our current health care system is not financially sustainable.
• In 2017 US citizens, employers and governments spent more than $3.5 trillion of wealth, corporate income, and taxpayer dollars on health care. Health care spending accounts for approximately 18% of Gross Domestic Product (GDP), and equates to approximately $11,000 per person in the U.S.
• When accounting for taxes paid and the employee-borne costs of employer provided insurance, health care represents the largest household expenditure – estimated at $28,000 average household spending.
• Annual cost of the current health care system is projected to increase by $1.6 trillion between now and 2027, increasing annual household costs by $5,000.

Our current system is inequitable in terms of cost and access.
• In 2017, the system incurred approximately $240 billion in public debt, an inequitable shifting of costs to future generations.
• The current system relies on subsidization from the private to the public sector, with the premium, tax and fee payments from citizens who pay for their coverage in the employer and individual market supporting governmental programs. In 2017 average Medicare per capita payments for health care were nearly twice that paid for employer and individual per capita benefits, which while understandable in terms of health status underscores the fact that the private sector “overpayments” are required to cover public sector “underpayments.”.
• Inequities in reimbursement rates result in providers refusing or not being able to provide care to some patients. For example, data suggests an estimated 12 million Medicaid patients may not have been able to access care when needed.

Our current system’s business model may be broken, unable to recognize and accommodate financial realities and is adversely affecting government’s ability to meet other responsibilities.
• If health care costs had paralleled wage growth since 1960, costs would be 73% lower than they are today. • While private sector insurance costs are projected to increase by 50% by 2027, it’s projected that by that year public health care program costs will pay 56% of all health care costs, hindering federal, state and local governments abilities to invest in other areas.
• For example, Medicaid consumes approximately 67% of every federal dollar going to state and local governments, up from 55% just eight years ago and paralleling a significant decline in state and local infrastructure investments.

CRFB Key Findings on Federal Health Care Spending:
• Spending on the major federal health programs – Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and the health insurance exchange subsidies created under the Affordable Care Act – has increased from 0.8 percent of the economy in 1970 to 3.1 percent by 2000 and 5.4 percent in 2017.
• In dollar terms, major federal health spending has grown by 230 percent since 2000, while economy-wide prices have only risen 40 percent, and the economy has only grown by 90 percent.
• Health care will consume a larger share of the budget over time. In 1970, major health programs made up only 5 percent of the budget. That share increased to 20 percent by 2000 and 28 percent by 2017. By 2028, one-third of federal dollars not spent to pay interest on the debt will go toward health spending, and by 2040, nearly 40 percent will. The Medicare Part A trust fund is projected to become insolvent by 2026, only eight years from now when today’s 57 year-olds enter the program and today’s newest Medicare beneficiaries turn 73. At that point, law calls for payments to be cut by 9 percent to bring spending in line with revenue, with that cut rising to 22 percent by 2040.

Health care affects every American, and with an aging population it cannot be ignored much longer. The current debate about American health care is a narrow political debate that does not appropriately or effectively address the full range of issues involved impacting cost, access and quality. We hope you may find this information useful as you cover the health care issue during the campaign, and we are happy to provide additional information at your request.

For more information see:
Materials from the Concerned Actuaries Group

Big Numbers
Not enough of the current health care dialogue is focused on improving the quality, availability, and management of health care. Critical to this conversation is recognizing the magnitude of the numbers involved in American health care and understanding how that magnitude affects both the nation’s physical and financial health.

Big Benefits
The U.S. health care system includes several different payers who make substantial benefit payments to finance health care, and the ways they do that also affect how the system operates. Big Benefits looks at the relationship between benefits, usage, and costs in the health care system.

Who Pays
An important of aspect of health care in the U.S. is who pays for it and how they do it. Who Pays discusses the allocation and management of public and private costs and payments.

Materials from the Committee for a Responsible Federal Budget

Health Spending and the Federal Budget
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 provides background on major health care programs in the federal budget.

Analysis of the 2018 Medicare Trustees' Report
The Medicare Trustees have released their 2018 report on the financial status of Medicare. This paper summarizes of the findings of the 2018 Medicare Trustees Report.

Health Care Spending in the Long-Term Outlook
The Congressional Budget Office's long-term outlook shows federal debt increasing significantly over the next 30 years, and the growth of health care spending is a major factor in that trend. This piece breaks down the spending growth that CBO projects and the reasons for it and compares CBO's projections for Medicare to those made by the Medicare Trustee.