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Reality Check: Health Care Costs Under the Status Quo are the Real Danger

Health Reform Director Nancy-Ann DeParle relays a striking reminder of what health care will cost America under the status quo.

Reality Check

Today we got a striking reminder of what defenders of the status quo are defending, and the future that lies ahead if opponents of reform get their way. And this isn't fear-mongering based on some deceptive distortion as we so often hear from those opponents, it's cold hard facts.

Today, the actuaries at the Center for Medicare and Medicaid Services released a report and new data on health spending that confirms what families and businesses around this country already know:  The need for health  insurance reform is urgent.  Rising health care costs are eating into family budgets, forcing employers to cut back;  and health spending is taking up a greater and greater percentage of America’s economic output.  The  report,  published in the journal Health Affairs, shows that health spending as a percentage of GDP has increased from 15.9 per cent in 2007 to 16.2 per cent in 2008.  That means more than one in six dollars in this country is tied up in the health care system.  The growth of health care spending is unsustainable.   The time to act is now. America cannot wait any longer.   

There is a glimmer of good news in the report:   Health spending slowed somewhat compared to the  the year before.  The numbers are still shocking:  National health spending reached $2.3 trillion, or $7681 per person in 2008:  The highest in the world.  And the reason the rate of spending slowed in this year was because of the economic slowdown.  Employers and families were simply forced to cut back.   Employers are spending less on health insurance because many no longer provide benefits to their workers. We know that many employers simply can’t afford the high cost.  Many families who have lost their jobs and health insurance went without the care and prescription drugs they need. 

Families are struggling to keep up with the cost of health care.   The share of family income spent on health care grew from 5.3% to 5.9% in one year. 

Government was also handed a higher bill. Health spending on Medicare  grew by 8.6 percent, driven in part by the high cost of private Medicare Advantage plans.  Health insurance reform legislation will eliminate wasteful overpayments to insurance companies while protecting guaranteed Medicare benefits and strengthening the Medicare Trust Fund. 

The data make clear that our economy and our families can no longer afford the health care status quo. The reform proposals being considered in Congress will help drive down the cost of health care while strengthening Medicare for our seniors and improving the quality of care for all Americans. Changing the way we handle hospitalizations to prevent mistakes and unnecessary readmissions and creating incentives in the payment system to reward quality of care rather than just the quantity of care are just some of the important reforms that will help us achieve this critical goal.

And we are closer to passing these reforms than ever before. President Obama’s leadership and the hard work of members of Congress have brought us to an historic moment. After decades of waiting, 2010 will be the year we make health reform a reality.

Nancy-Ann DeParle is the Director of the White House Office of Health Reform