Health care spending equals the sum of public and private spending on health care. The Obama Administration hopes to spend an additional trillion dollars on subsidized Medical insurance over the next decade. The only way such added federal spending could possibly “slow the rate of growth in health care spending” would be for private spending to fall by $1 trillion.
Total health care spending did stop rising faster than the economy during the Clinton Administration, when the government stopped paying for a rising share of the costs: Spending on health care was 13.6% of GDP in both 1993 and 2000. By no coincidence, government spending stabilized during those years, accounting for 43% of health care outlays in 1993 and 43.2% in 2000. Once government resumed paying a growing share of the bills, combined public and private spending began rising again, to 16% of GDP.
Congressional Democrats seem eager to tax the stuffing out of both sellers and buyers of private medical insurance. Maybe their “reform” plans really do aim to shrink private health insurance benefits by enough to compensate for their extra spending on public insurance, subsidies and Medicaid. Unless the new federal spending reduces private health care spending by more than a trillion dollars, however, their plans must push overall health care spending up, not down.