The sustainability of health spending growth.

INTRODUCTION Long-run federal budget projections show large imbalances in coming decades owing to two factors: the aging of the population and the assumed rapid growth in per capita health care [...]
We evaluate the long-run sustainability of health spending growth. Under the criterion that non-health consumption does not fall, 1 percent excess cost growth appears to be an upper bound for the economy as a whole when the projection horizon extends over the century, although some groups would experience declines in non-health consumption. More generally, the increase in health spending as a share of income may lead to a significant expansion of public sector financing, as has been the case historically. Extrapolation of historical trends also suggests that higher health spending will lead to insurance contracts with lower out-of-pocket payment shares, putting further upward pressure on health care expenditures.