Last week, I updated some information I collected in 2008 on health care spending. As expected, the cost of health care has continued to rise and it consumes a larger share of GDP than ever before, but the figure that really jumped out at me is the share of government revenue that is spent on health care.
In 2010, more than half of federal revenues were spent on health care. That’s up from 31 percent in 2006 and 2007, which is the last time I looked at this number. There are logical reasons for why health care now consumes so much of the federal budget—the expansion of prescription drug coverage in Medicare boosted spending early in the decade and the terrible economy in recent years has cut tax revenue—but central message I get from this data is that we desperately need to figure out how to address the cost of health care.
Yes, economic recovery and higher taxes could increase revenue and thus reduce the share of revenue that goes to health care. However, those are only short-term fixes. The real solution is to stabilize and eventually lower the cost of health care.
This figure shows the share of federal government revenues spent on health care in the past decade.
Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Expenditures 2010: Sponsor Highlights, no date.
Associate Director and Senior Policy Analyst, Frontier Group
Elizabeth Ridlington is associate director and senior policy analyst with Frontier Group. She focuses primarily on global warming, toxics, health care and clean vehicles, and has written dozens of reports on these and other subjects. Elizabeth graduated with honors from Harvard with a degree in government. She joined Frontier Group in 2002. She lives in Northern California with her husband and son.