The United States spends far more on health care than any other nation on the globe: $10,348 per person, which amounts to nearly 18 percent of gross domestic product. That is eight percentage points above the average of the industrialized member nations of the Organization for Economic Co-Operation and Development.
Government-funded Medicare and Medicaid account for more than $1 of every $3 of U.S. health-care spending and $1 of every $4 in the federal budget. Medicare has been growing at more than twice the rate of inflation and is forecast to accelerate as baby boomers age, while the cost of Medicaid has grown as the Affordable Care Act has brought Medicaid coverage to more people.
So it is little wonder that congressional leaders are looking to chop Medicare and Medicaid spending, which have long been favorite targets of budget-cutters. As part of its effort to replace the ACA, Congress last year tried to eliminate full dollar-for-dollar sharing of Medicaid costs between the federal and state governments and replace it with finite block grants to the states.
The plan would have limited the federal government's expenditures, leaving states with the lose-lose proposition of either paying more for Medicaid programs or slashing services and eligibility. Meanwhile, on a smaller level, Washington has delivered "death by a thousand cuts" to hospitals, engaging in a misguided effort to achieve savings by chopping hospital reimbursements time and time again. Most recently, the Trump administration and Congress have reduced Medicaid-funded disproportionate share hospital (DSH) payments, which assist hospitals that provide substantial charity care to residents of low-income neighborhoods.
Such budget-cutting strategies end up hurting the most vulnerable members of society — the millions of poor, elderly and disabled Americans who rely upon the government to provide their health care. The fact is, there have been too many efforts to cut costs rather than address the real source of the problem: America's health-care delivery system, which is inefficient.