From the Editors
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Holding the Line on Health Spending
It will probably be years before we can tell whether the health care reform legislation makes a difference to costs, and its effect is likely to be obscured by the poor state of the economy.
There is a lot of speculation about how health care reform will affect health care costs. Some think it will reduce them, others fear it will increase them, and still others see little or no effect at all. The Health Care Cost Monitor invited several of its contributors to give their views in answers to some questions. This is the second in a series of responses. –The Editors
In terms of curbing health care costs, is the health care reform legislation a win, a loss, or neutral?
As a share of our national income, health spending has grown along a straight line for half a century (see chart). Spending rises above the line when economic conditions are bad and national income grows slowly or declines. It falls below the line when national income grows more quickly. But it has never strayed far from the line despite a long history of heralded reforms – certificate of need, professional standards review organizations, prospective payment for hospitals, health maintenance organizations, and more.
We probably won’t be able to tell whether the health reform legislation makes a difference to costs in the next few years. Its effect is likely to be obscured by the poor state of the economy, which will cause health’s share of national income to rise. But even if spending sticks to its historic line, we will at last guarantee health insurance, and with it, basic health care, to everyone.
National Health Spending as a Percent of National Income (Source: Centers for Medicare & Medicaid Services)
Louise Russell is Research Professor at the Institute for Health, Health Care Policy, and Aging Research, and Professor in the Department of Economics, Rutgers University. She was a member of the first U.S. Preventive Services Task Force (1984-1988) and co-chaired the U.S. Public Health Service’s Panel on Cost-Effectiveness in Health and Medicine (1993-1996). lrussell@ifh.rutgers.edu; 732-932-6507.