This is the accessible text file for CG Presentation number GAO-08-
338CG entitled 'Fiscal and Health Care Challenges' which was released 
on December 6, 2007.

United States Government Accountability Office:
GAO:

Fiscal and Health Care Challenges:

The Honorable David M. Walker: 
Comptroller General of the United States: 

National Conference on Health Care Consumerism: 

December 5, 2007: 

GAO-08-338CG: 

Composition of Federal Spending: 

[See PDF for image] - graphic text:

There are three pie charts, containing the following compositions of 
spending by category:

Year: 1966;
Defense: 43%;
Social Security: 15%; 
Medicare and Medicaid: 1%; 
Net Interest: 7%; 
All Other: 34%.

Year: 1986;
Defense: 28%;
Social Security: 20%; 
Medicare and Medicaid: 10%; 
Net Interest: 14%; 
All Other: 29%.

Year: 2006;
Defense: 20%;
Social Security: 21%; 
Medicare and Medicaid: 19%; 
Net Interest: 9%; 
All Other: 32%.

Source: Office of Management and Budget and the Department of the 
Treasury.

Note: Numbers may not add to 100 percent due to rounding.

[End of figure]

Table: Major Fiscal Exposures ($ trillions):

Explicit liabilities (Publicly held debt, Military & civilian pensions 
& retiree health, Other): 
2000: $6.9; 
2006: $10.4; 
Percent increase: 52.

Commitments & contingencies (e.g., PBGC, undelivered orders):
2000: 0.5;
2006: 1.3
Percent increase: 140. 

Implicit exposures: 
2000: 13.0; 
Future Social Security benefits: 3.8; 
Future Medicare Part A benefits: 2.7; 
Future Medicare Part B benefits: 6.5; 
Future Medicare Part D benefits: [Empty]. 

2006: 38.8; 
Future Social Security benefits: 6.4; 
Future Medicare Part A benefits: 11.3; 
Future Medicare Part B benefits: 13.1; 
Future Medicare Part D benefits: 7.9.
Percent increase: 197. 

Total, 2000: $20.4; 
Total, 2006: $50.5; 
Percent increase: 147. 

Source: 2000 and 2006 Financial Report of the United States Government. 

Note: Totals and percent increases may not add due to 
rounding.Estimates for Social Security and Medicare are at present 
value as of January 1 of each year and all other data are as of 
September 30. 

[End of table]

Table: How Big is Our Growing Fiscal Burden? 

This fiscal burden can be translated and compared as follows: 

Total major fiscal exposures: $50.5 trillion; 
Total household net worth[1]: $53.3 trillion; 
Burden/Net worth ratio: 95 percent.

Burden[2]: 
Per person: $170,000; 
Per full-time worker: $400,000; 
Per household: $440,000.

Income: 
Median household income[3]: $46,326; 
Disposable personal income per capita[4]: $31,519. 

Source: GAO analysis. 

Notes: (1) Federal Reserve Board, Flow of Funds Accounts, Table B.100, 
2006:Q2 (Sept. 19, 2006); (2) Burdens are calculated using estimated 
total U.S. population as of 9/30/06, from the U.S. Census Bureau; full-
time workers reported by the Bureau of Economic Analysis, in NIPA table 
6.5D (Aug. 2, 2006); and households reported by the U.S. Census Bureau, 
in Income, Poverty, and Health Insurance Coverage in the United States: 
2005(Aug. 2006); (3) U.S. Census Bureau, Income, Poverty, and Health 
Insurance Coverage in the United States: 2005(Aug. 2006); and (4) 
Bureau of Economic Analysis, Personal Income and Outlays: October 2006, 
table 2, (Nov. 30, 2006). 

[End of table]

Potential Fiscal Outcomes Under Baseline Extended (January 2001); 
Revenues and Composition of Spending as a Share of GDP. 

[See PDF for image] - graphic text.

This is a line/stacked bar graph with one line (revenue) and four 
stacked bars containing four spending items (Net interest, Social 
Security, Medicare and Medicaid, and All other spending). The vertical 
axis represents Percent of GDP and the horizontal axis represents 
fiscal years 2005, 2015[a], 2030[a], and 2040[a]. The following data is 
depicted: 

2005: 
Net interest: 0.8%; 
Social Security: 4.3%; 	
Medicare & Medicaid: 3.7%; 
All other spending: 7.994%; 
Revenue: 20.3%. 

2015[A]: 
Net interest: [Empty]; 
Social Security: 5.1%; 	
Medicare & Medicaid: 4.9%; 
All other spending: 5.574%; 
Revenue: 20.4%. 

2030[A]: 
Net interest: [Empty]; 
Social Security: 6.6%; 	
Medicare & Medicaid: 9.4%; 
All other spending: 3.991%; 
Revenue: 20.4%. 

2040[A]: 
Net interest: [Empty]; 
Social Security: 6.7%; 	
Medicare & Medicaid: 9%; 
All other spending: 4.361%; 
Revenue: 20.4%. 

Source: GAO’s January 2001 analysis. 

[a] All other spending is net of offsetting interest receipts. 

[End of graph] 

Potential Fiscal Outcomes Under Alternative Simulation; Revenues and 
Composition of Spending as a Share of GDP: 

[See PDF for image] - graphic text. 

This is a line/stacked bar graph with one line (revenue) and four 
stacked bars containing four spending items (Net interest, Social 
Security, Medicare and Medicaid, and All other spending). The vertical 
axis represents Percent of GDP and the horizontal axis represents 
fiscal years 2006, 2015, 2030, and 2040. 

The following data is depicted: 

Fiscal year 2006: 
Net interest: 1.7%; 
Social Security: 4.2%; 
Medicare & Medicaid: 3.9%; 
All other spending: 10.6%; 
Revenue: 18.4%.

Fiscal year 2015: 
Net interest: 2.3%; 
Social Security: 4.8%; 
Medicare & Medicaid: 5.7%; 
All other spending: 9.6%; 
Revenue: 18%.

Fiscal year 2030: 
Net interest: 5.8%; 
Social Security: 6.6%; 
Medicare & Medicaid: 8.8%; 
All other spending: 9.6%; 
Revenue: 18.6%. 

Fiscal year 2040: 
Net interest: 11.6%; 
Social Security: 7.2%; 
Medicare & Medicaid: 10.8%; 
All other spending: 9.6%; 
Revenue: 18.6%. 

Source: GAO’s August 2007 analysis. 

Notes: AMT exemption amount is retained at the 2006 level through 2017 
and expiring tax provisions are extended. After 2017, revenue as a 
share of GDP returns to its historical level of 18.3 percent of GDP 
plus expected revenues from deferred taxes, i.e. taxes on withdrawals 
from retirement accounts. Medicare spending is based on the Trustees 
April 2007 projections adjusted for the Centers for Medicare and 
Medicaid Services alternative assumption that physician payments are 
not reduced as specified under current law. 

[End of graph]

Growth in Spending for Social Security, Medicare, and Medicaid Expected 
to Outpace Economic Growth: 

[See PDF for image] 

This image is a bar graph depicting Growth in Spending for Social 
Security, Medicare, and Medicaid Expected to Outpace Economic Growth. 
The vertical axis of the graph represents growth in constant dollars, 
2007-2032 in percentage from 0 to 150. The horizontal axis represents 
spending growth in the four areas. The following data is depicted: 

Growth in Constant dollars, 2007-2032:
GDP: 71%; 
Social Security Spending: 127%; 
Medicaid Spending: 224%; 
Medicare Spending: 235%.

Source: GAO analysis based on data from the Office of the Chief 
Actuary, Social Security Administration; Office of the Actuary,Centers 
for Medicare and Medicaid Services; and the Congressional Budget 
Office. 

Notes: Social Security and Medicare projections based on the 
intermediate assumptions of the 2007 Trustees’ Reports. Medicaid 
projections based on CBO’s August 2007 short-term Medicaid estimates 
and CBO’s December 2005 long-term Medicaid projections under mid-range 
assumptions. 

[End of graph] 

Social Security, Medicare, and Medicaid Spending as a Percent of GDP: 

[See PDF for image] - graphic text. 

This is a line graph with three stacked lines (Social Security, 
Medicaid, and Medicare). The vertical axis represents Percent of GDP 
and the horizontal axis represents fiscal years 2000 through 2080. The 
following data is depicted: 

2000: 
Social Security: 4.229; 
Medicaid: 1.23; 
Medicare: 2.277. 

2001: 
Social Security: 4.334; 
Medicaid: 1.322; 
Medicare: 2.433. 

2002: 
Social Security: 4.409; 
Medicaid: 1.44; 
Medicare: 2.523. 

2003: 
Social Security: 4.371; 
Medicaid: 1.501; 
Medicare: 2.56. 

2004: 
Social Security: 4.283; 
Medicaid: 1.516; 
Medicare: 2.629. 
		
2005:	
Social Security: 4.254; 
Medicaid: 1.457; 
Medicare: 2.7. 

2006:	
Social Security: 4.28; 
Medicaid: 1.383; 
Medicare: 3.072. 

2007:	
Social Security: 4.29; 
Medicaid: 1.401; 
Medicare: 3.185. 

2008: 
Social Security: 4.24; 
Medicaid: 1.449; 
Medicare: 3.255. 

2009:	
Social Security: 4.26; 
Medicaid: 1.490; 
Medicare: 3.333. 

2010:	
Social Security: 4.32; 
Medicaid: 1.531; 
Medicare: 3.414. 

2011:	
Social Security: 4.36; 
Medicaid: 1.578; 
Medicare: 3.49. 

2012:	
Social Security: 4.44; 
Medicaid: 1.630; 
Medicare: 3.588. 

2013:	
Social Security: 4.54; 
Medicaid: 1.683; 
Medicare: 3.694. 

2014:	
Social Security: 4.65; 
Medicaid: 1.739; 
Medicare: 3.806. 

2015:	
Social Security: 4.76; 
Medicaid: 1.799; 
Medicare: 3.918. 

2016:	
Social Security: 4.86; 
Medicaid: 1.864; 
Medicare: 4.044. 

2017:	
Social Security: 4.976; 
Medicaid: 1.930 
Medicare: 4.183. 

2018:	
Social Security: 5.08; 
Medicaid: 2.2; 
Medicare: 4.331. 

2019:	
Social Security: 5.2; 
Medicaid: 2.2; 
Medicare: 4.483. 

2020:	
Social Security: 5.31; 
Medicaid: 2.3; 
Medicare: 4.642. 

2021:	
Social Security: 5.41; 
Medicaid: 2.3; 
Medicare: 4.809. 

2022:	
Social Security: 5.22; 
Medicaid: 2.4; 
Medicare: 4.988. 

2023: 	
Social Security: 5.61; 
Medicaid: 2.4; 
Medicare: 5.173. 
		
2024:	
Social Security: 5.71; 
Medicaid: 2.5; 
Medicare: 5.359. 

2025:	
Social Security: 5.8; 
Medicaid: 2.6; 
Medicare: 5.547. 

2026:	
Social Security: 5.89; 
Medicaid: 2.6; 
Medicare: 5.739. 

2027:	
Social Security: 5.97; 
Medicaid: 2.7; 
Medicare: 5.935. 

2028:	
Social Security: 6.05; 
Medicaid: 2.7; 
Medicare: 6.131. 

2029:	
Social Security: 6.12; 
Medicaid: 2.8; 
Medicare: 6.322. 

2030:	
Social Security: 6.17; 
Medicaid: 2.8; 
Medicare: 6.505. 

2031:	
Social Security: 6.22; 
Medicaid: 2.9; 
Medicare: 6.682. 

2032:	
Social Security: 6.27; 
Medicaid: 2.9; 
Medicare: 6.851. 

2033:	
Social Security: 6.3; 
Medicaid: 3; 
Medicare: 7.017. 

2034:	
Social Security: 6.32; 
Medicaid: 3.1; 
Medicare: 7.279. 

2035:	
Social Security: 6.33; 
Medicaid: 3.1; 
Medicare: 7.34. 

2036:	
Social Security: 6.34; 
Medicaid: 3.2; 
Medicare: 7.498. 

2037:	
Social Security: 6.34; 
Medicaid: 3.3; 
Medicare: 7.643. 

2038:	
Social Security: 6.34; 
Medicaid: 3.3; 
Medicare: 7.774. 

2039:	
Social Security: 6.33; 
Medicaid: 3.4; 
Medicare: 7.894. 

2040:	
Social Security: 6.31; 
Medicaid: 3.4; 
Medicare: 8.01. 

2041:	
Social Security: 6.3; 
Medicaid: 3.5; 
Medicare: 8.121. 

2042:	
Social Security: 6.28; 
Medicaid: 3.6; 
Medicare: 8.229. 

2043: 
Social Security: 6.27; 
Medicaid: 3.6; 
Medicare: 8.334. 

2044:	
Social Security: 6.25; 
Medicaid: 3.7; 
Medicare: 8.437. 

2045:	
Social Security: 6.24; 
Medicaid: 3.7; 
Medicare: 8.54. 

2046:	
Social Security: 6.23; 
Medicaid: 3.8; 
Medicare: 8.64. 

2047:	
Social Security: 6.22; 
Medicaid: 3.8; 
Medicare: 8.737. 

2048:	
Social Security: 6.21; 
Medicaid: 3.9; 
Medicare: 8.829. 

2049:	
Social Security: 6.2; 
Medicaid: 3.9; 
Medicare: 8.916. 

2050:	
Social Security: 6.2; 
Medicaid: 4; 
Medicare: 9.002. 

2051:	
Social Security: 6.19; 
Medicaid: 4.063; 
Medicare: 9.008. 

2052:	
Social Security: 6.19; 
Medicaid: 4.127; 
Medicare: 9.172. 

2053:	
Social Security: 6.19; 
Medicaid: 4.192; 
Medicare: 9.256. 

2054:	
Social Security: 6.2; 
Medicaid: 4.258; 
Medicare: 9.344. 

2055:	
Social Security: 6.2; 
Medicaid: 4.325; 
Medicare: 9.439. 

2056:	
Social Security: 6.21; 
Medicaid: 4.393; 
Medicare: 9.538. 

2057:	
Social Security: 6.21; 
Medicaid: 4.462; 
Medicare: 9.634. 

2058:	
Social Security: 6.22; 
Medicaid: 4.533; 
Medicare: 9.728. 

2059:	
Social Security: 6.23; 
Medicaid: 4.604; 
Medicare: 9.82. 

2060:	
Social Security: 6.23; 
Medicaid: 4.676; 
Medicare: 9.91. 

2061:	
Social Security: 6.24; 
Medicaid: 4.75; 
Medicare: 10. 

2062:	
Social Security: 6.24; 
Medicaid: 4.825; 
Medicare: 10.087. 

2063:	
Social Security: 6.24; 
Medicaid: 4.901; 
Medicare: 10.175. 

2064:	
Social Security: 6.25; 
Medicaid: 4.978; 
Medicare: 10.262. 

2065:	
Social Security: 6.25; 
Medicaid: 5.056; 
Medicare: 10.349. 

2066:	
Social Security: 6.25; 
Medicaid: 5.136; 
Medicare: 10.429. 

2067:	
Social Security: 6.25; 
Medicaid: 5.217; 
Medicare: 10.502. 

2068:	
Social Security: 6.26; 
Medicaid: 5.299; 
Medicare: 10.574. 

2069:	
Social Security: 6.26; 
Medicaid: 5.383; 
Medicare: 10.648. 

2070:	
Social Security: 6.26; 
Medicaid: 5.467; 
Medicare: 10.718. 

2071:	
Social Security: 6.27; 
Medicaid: 5.553; 
Medicare: 10.784. 

2072:	
Social Security: 6.27; 
Medicaid: 5.641; 
Medicare: 10.845. 

2073:	
Social Security: 6.27; 
Medicaid: 5.73; 
Medicare: 10.906. 

2074:	
Social Security: 6.27; 
Medicaid: 5.82; 
Medicare: 10.964. 

2075:	
Social Security: 6.27; 
Medicaid: 5.912; 
Medicare: 11.022. 

2076:	
Social Security: 6.27; 
Medicaid: 6.005; 
Medicare: 11.079. 

2077:	
Social Security: 6.27; 
Medicaid: 6.099; 
Medicare: 11.134. 

2078:	
Social Security: 6.28; 
Medicaid: 6.195; 
Medicare: 11.187. 

2079:	
Social Security: 6.28; 
Medicaid: 6.293; 
Medicare: 11.239. 

2080:	
Social Security: 6.28; 
Medicaid: 6.392; 
Medicare: 11.29. 

[End of graph] 

Source: GAO analysis based on data from the Office of the Chief 
Actuary, Social Security Administration, Office of the Actuary, Centers 
for Medicare and Medicaid Services, and the Congressional Budget 
Office. 

Notes: Social Security and Medicare projections based on the 
intermediate assumptions of the 2006 Trustees’ Reports. Medicaid 
projections based on CBO’s August 2006 short-term Medicaid estimates 
and CBO’s December 2005 long-term Medicaid projections under mid-range 
assumptions. 

[End of graph] 

Revenue Loss Estimates for the Largest Tax Expenditures Reported for 
Fiscal Year 2006: 

[See PDF for image] 

The figure is a stacked bar graph depicting the Revenue Loss Estimates 
for the Largest Tax Expenditures Reported for Fiscal Year 2006. The 
vertical axis of the graph represents revenue loss estimates (dollars 
in billions). The horizontal axis of the graph represents five 
categories of tax expenditures. The following data is depicted: 
	
Exclusion of employer contributions for medical insurance premiums and 
medical care: 
Treasury estimated income tax revenue losses: $125; 
Approximate payroll tax revenue losses: $62.5; 
Total: $187.5. 

Net exclusion of employer-sponsored pension contributions and earnings: 
Treasury estimated income tax revenue losses: $89.8[A]. 
	
Deductibility of mortgage interest on owner-occupied homes: 
Treasury estimated income tax revenue losses: $68.3. 
	
Capital gains (except agriculture, timber, iron ore, and coal): 
Treasury estimated income tax revenue losses: $48.6. 
	
Deductibility of nonbusiness state and local taxes other than on owner-
occupied homes: 
Treasury estimated income tax revenue losses: $43.1. 	

Source: GAO analysis of OMB, Analytical Perspectives, Budget of the 
United States Government,Fiscal Year 2008. 

[a] The value of employer-provided health insurance is excluded from 
Medicare and Social Security payroll taxes. Some researchers have 
estimated that payroll tax revenue losses amounted to more than half of 
the income tax revenue losses in 2004, and we use this estimate for 
2006. The research we are aware of dealt only with health care, 
therefore the 50 percent figure may not apply to other items that are 
excluded from otherwise applicable income and payroll taxes. 

[End of graph] 

Current Fiscal Policy Is Unsustainable: 

* The “Status Quo”is Not an Option: 
- We face large and growing structural deficits largely due to known 
demographic trends and rising health care costs. 
- GAO’s simulations show that balancing the budget in 2040 could 
require actions as large as: 
* Cutting total federal spending by 60 percent or; 
* Raising federal taxes to 2 times today's level. 
* Faster Economic Growth Can Help, but It Cannot Solve the Problem: 
- Closing the current long-term fiscal gap based on reasonable 
assumptions would require real average annual economic growth in the 
double digit range every year for the next 75 years. 
- During the 1990s, the economy grew at an average 3.2 percent per 
year. 
- As a result, we cannot simply grow our way out of this problem. Tough 
choices will be required. 

The Way Forward: A Three-Pronged Approach:

1. Improve Financial Reporting, Public Education, and Performance 
Metrics. 
2. Strengthen Budget and Legislative Processes and Controls. 
3. Fundamentally Reexamine & Transform for the 21st Century (i.e., 
entitlement programs, other spending, and tax policy). 

Solutions Require Active Involvement from both the Executive and 
Legislative Branches. 

21st Century Challenges Report: 

* Provides background, framework, and questions to assist in 
reexamining the base; 

* Covers entitlements & other mandatory spending, discretionary 
spending, and tax policies and programs; 

* Based on GAO’s work for the Congress. 

Source: GAO.

Twelve Reexamination Areas: 

Mission Areas:
* Defense; 
* Education & Employment;
* Financial Regulation & Housing;
* Health Care;
* Homeland Security;
* International Affairs;
* Natural Resources, Energy & Environment;
* Retirement & Disability;
* Science & Technology;
* Transportation.

Crosscutting Areas:

* Improving Governance; 
* Reexamining the Tax System. 

Illustrative 21st Century Questions: Health Care: 

* How can we make our current Medicare and Medicaid programs 
sustainable? For example, should the eligibility requirements (e.g., 
age, income requirements) for these programs be modified? 

* How can we perform a systematic reexamination of our current health 
care system? For example, could public and private entities work 
jointly to establish formal reexamination processes that would (1) 
define and update as needed a minimum core of essential health care 
services, (2) ensure that all Americans have access to the defined 
minimum core services, (3) allocate responsibility for financing these 
services among such entities as government, employers, and individuals, 
and (4) provide the opportunity for individuals to obtain additional 
services at their discretion and cost? 

Key Dates Highlight Long Term Challenges of the Medicare Program: 

Date: 2007; 
Event: Medicare Part A outlays exceed cash income. 

Date: 2007; 
Event: Estimated trigger date for “Medicare funding warning.”

Date: 2013; 
Event: Projected date that annual “general revenue funding” for Part B 
will exceed 45 percent of total Medicare outlays. 

Date: 2019; 
Part A trust fund exhausted, annual income sufficient to pay about 80% 
of promised Part A benefits. 

Source: 2007 Annual Report of The Boards of Trustees of The Federal 
Hospital Insurance and Federal Supplementary Medical Insurance Trust 
Funds(Washington, DC, April 2007). 

[End of table] 

Health Care Spending by Source of Funds, 1965-2005: 

[See PDF for image] 

This image contains three pie-charts that depict the following data: 

Health Care Spending by Source of Funds, 1965: 
Out-of-Pocket: 43%; 
Private Health Insurance: 24%; 
Medicare: 0; 
Federal and state Medicaid: 0;
Other Public: 25%; 
Other Private: 8%. 

Health Care Spending by Source of Funds, 1985: 
Out-of-Pocket: 22%; 
Private Health Insurance: 30%; 
Medicare: 16%; 
Federal and state Medicaid: 9%; 
Other Public: 15%; 
Other Private: 8%. 

Health Care Spending by Source of Funds, 2005: 
Out-of-Pocket: 13%; 
Private Health Insurance: 35%; 
Medicare: 17%; 
Federal and state Medicaid: 16%; 
Other Public: 12%; 
Other Private: 7%. 

Source: The Centers for Medicare & Medicaid Services, Office of the 
Actuary. 

Notes: The most current data available on health care spending are for 
2005. Out-of-pocket spending includes direct spending by consumers on 
coinsurance, deductibles, and any amounts not covered by insurance. Out-
of-pocket premiums paid by individuals are not counted here but are 
counted as part of Private Health Insurance. Percentages may not add to 
100 due to rounding. 

[End of image] 

Growth in Health Care Spending Health Care Spending as a Percentage of 
GDP: 

[See PDF for image] 

This figure is a bar graph depicting Growth in Health Care Spending 
Health Care Spending as a Percentage of GDP for five specific years. 
The vertical axis of the graph represents percent from 0 to 25. The 
horizontal axis of the graph represents years 1975, 1985, 1995, 2005, 
and 2015. The following data is depicted: 

Year: 1975; 
National health expenditures as a percent of GDP: 8.1%. 

Year: 1985; 
National health expenditures as a percent of GDP: 10.4%. 

Year: 1995; 
National health expenditures as a percent of GDP: 13.7%. 

Year: 2005; 
National health expenditures as a percent of GDP: 16.0%. 

Year: 2015; 
National health expenditures as a percent of GDP: 19.2%. 

Source: The Centers for Medicare & Medicaid Services, Office of the 
Actuary. 

Notes: The most current data available on health care spending are for 
2005. The figure for 2015 is projected. 

[End of graph] 

Cumulative Growth in Health Care Spending Per Capita, Medical 
Inflation, GDP Per Capita, and General Inflation, 2000-2005: 

[See PDF for image] 

The figure is a line graph depicting the Cumulative Growth in Health 
Care Spending Per Capita, Medical Inflation, GDP Per Capita, and 
General Inflation, 2000-2005. The vertical axis of the graph represents 
cumulative percentage from 0 to 50. The horizontal axis of the graph 
represents years from 2000 to 2005. The following data is depicted: 

Year: 2000; 
Health care spending per capita: 0; 
CPI-Medical: 0;	
GDP per capita: 0; 
CPI-Urban consumers: 0. 

Year: 2001; 
Health care spending per capita: 7.47; 
CPI-Medical: 4.6; 
GDP per capita: 2.08; 
CPI-Urban consumers: 2.85. 

Year: 2002; 
Health care spending per capita: 16.05; 
CPI-Medical: 9.51; 
GDP per capita: 4.5; 
CPI-Urban consumers: 4.47. 

Year: 2003; 
Health care spending per capita: 24.26; 
CPI-Medical: 13.92; 
GDP per capita: 8.32; 
CPI-Urban consumers: 6.85. 

Year: 2004; 
Health care spending per capita: 31.98; 
CPI-Medical: 18.9; 
GDP per capita: 14.64; 
CPI-Urban consumers: 9.7. 

Year: 2005; 
Health care spending per capita: 39.81; 
CPI-Medical: 23.93; 
GDP per capita: 20.77; 
CPI-Urban consumers: 13.41. 

Source: Bureau of Labor Statistics, The Centers for Medicare & Medicaid 
Services, Office of the Actuary, and the Bureau of Economic Analysis. 

Note: The most current data available on health care spending per 
capita are for 2005. 

[End of figure] 

Growth in Health Care Spending: U.S Compared to Other OECD Countries, 
2005: 

[See PDF for image] 

This figure is a plotted point graph depicting Growth in Health Care 
Spending: U.S Compared to Other OECD Countries, 2005. The vertical axis 
of the graph represents percent of GDP spent on health care. The 
horizontal axis of the graph represents health care spending per capita 
(USD $PPP). The following data is depicted: 

There are twenty-nine plotted points on the graph, with the following 
six specifically depicted: 

Country: Turkey; 
Percent of GDP spent on health care: 7.6% and $586. 

Country: South Korea; 
Percent of GDP spent on health care: 6.0% and $1,318. 

Country: Switzerland; 
Percent of GDP spent on health care: 11.6% and $4,177. 

Country: Norway; 
Percent of GDP spent on health care: 9.1% and $4,364. 

Country: Luxembourg; 
Percent of GDP spent on health care: 7.9% and $5,563. 

Country: United States; 
Percent of GDP spent on health care: 15.3% and $6,401. 

Source: OECD Health Data, 2007. 

Notes: All of the data on per capita spending and GDP have been 
translated into U.S. dollar equivalents, with exchange rates based on 
purchasing power parities (PPPs) of the national currencies. Data for 
Australia, Hungary, Japan, and the Netherlands are for 2004. 

[End of graph] 

Percentage of Firms Offering Health Benefits, 2000-2007: 

[See PDF for image] 

The figure is a series vertical bars depicting the percentage of firms 
offering health benefits, 2000-2007. The following data is depicted: 

Year: 2000; 
Percentage of Firms Offering Health Benefits: 69%. 

Year: 2001; 
Percentage of Firms Offering Health Benefits: 68%. 

Year: 2002; 
Percentage of Firms Offering Health Benefits: 66%. 

Year: 2003; 
Percentage of Firms Offering Health Benefits: 66%. 

Year: 2004; 
Percentage of Firms Offering Health Benefits: 63%. 

Year: 2005; 
Percentage of Firms Offering Health Benefits: 60%. 

Year: 2006; 
Percentage of Firms Offering Health Benefits: 61%. 

Year: 2007; 
Percentage of Firms Offering Health Benefits: 60%. 

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits. 

Notes: The survey results are based on a sample of 3,159 firms and 
include both small firms (3-199 workers) and large firms (200+ 
workers). While the year to year changes in the percentage of firms 
offering benefits have not been statistically significant, the 
cumulative effect has been a large and statistically significant change 
over this 7 year period. 

[End of figure] 

Change in Average Monthly Worker Premium Contributions Paid by Covered 
Workers for Single and Family Coverage, 2000 to 2007: 

[See PDF for image] 

This figure is a vertical bar graph depicting the change in average 
monthly worker premium contributions paid by covered workers for single 
and family coverage, 2000 to 2007. The vertical axis of the graph 
represents dollars from 0 to 300. The horizontal axis of the graph 
represents single and family coverage for the years 2000 and 2007. The 
following data is depicted: 

Year: 2000;
Single Coverage: $28; 
Family Coverage: $58. 

Year: 2007;
Single Coverage: $135; 
Family Coverage: $273. 

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits. 

Note: Premium contributions are reported in nominal dollars. 

[End of graph] 

Growth in Health Insurance Premiums for Employer-Sponsored Health 
Insurance: Cumulative Growth in Health Insurance Premiums, Overall 
Inflation, and Workers’ Earnings, 2000-2007: 

[See PDF for image] 

The figure is a line graph with three lines depicting the growth in 
health insurance premiums for employer-sponsored health insurance: 
cumulative growth in health insurance premiums, overall inflation, and 
workers’ earnings, 2000-2007. The vertical axis of the graph represents 
cumulative percentage from 0 to 120. The horizontal axis of the graph 
represents years 2000 through 2007. The following data is depicted: 

Growth in Health Insurance Premiums for Employer-Sponsored Health 
Insurance: 2000; 
Health insurance premiums: 0; 
Workers' earnings: 0; 
Overall inflation: 0. 

Growth in Health Insurance Premiums for Employer-Sponsored Health 
Insurance, 2001; 
Health insurance premiums: 20; 
Workers' earnings: 8.1; 
Overall inflation: 6.5. 

Growth in Health Insurance Premiums for Employer-Sponsored Health 
Insurance, 2002; 
Health insurance premiums: 35.5; 
Workers' earnings: 10.9; 
Overall inflation: 8.3. 

Growth in Health Insurance Premiums for Employer-Sponsored Health 
Insurance, 2003; 
Health insurance premiums: 54.3; 
Workers' earnings: 14.2; 
Overall inflation: 10.6. 

Growth in Health Insurance Premiums for Employer-Sponsored Health 
Insurance, 2004; 
Health insurance premiums: 71.6; 
Workers' earnings: 16.6; 
Overall inflation: 13.1. 

Growth in Health Insurance Premiums for Employer-Sponsored Health 
Insurance, 2005; 
Health insurance premiums: 87.4; 
Workers' earnings: 19.7; 
Overall inflation: 17.1. 

Growth in Health Insurance Premiums for Employer-Sponsored Health 
Insurance, 2006; 
Health insurance premiums: 101.8; 
Workers' earnings: 24.3; 
Overall inflation: 21.2. 

Growth in Health Insurance Premiums for Employer-Sponsored Health 
Insurance, 2007; 
Health insurance premiums: 114.1; 
Workers' earnings: 28.9; 
Overall inflation: 24.3. 

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 
Bureau of Labor Statistics. 

Note: Data on premium increases reflect the employer’s and employee’s 
cost of health insurance premiums for a family of four. 

[End of figure] 

Number of Non-elderly Uninsured Americans, 1999-2006: 

[See PDF for image] 

This figure is a vertical bar graph depicting the number of non-elderly 
uninsured Americans, 1999-2006. The vertical axis of the graph 
represents population in millions from 0 to 50. The horizontal axis of 
the graph represents years 199 through 2006. The following data is 
depicted: 

Number of Non-elderly Uninsured Americans: 
1999: 38.8 million; 
2000: 38.4 million; 
2001: 39.8 million; 
2002: 42.0 million; 
2003: 43.4 million; 
2004: 43.5 million; 
2005: 44.8 million; 
2006: 47.0 million. 

Source: U.S. Census Bureau, Current Population Survey, 2000-2007 Annual 
Social and Economic Supplements. 

Notes: Estimates for 1999-2005 were revised to reflect the results of a 
change to the survey process that assigns insurance coverage to 
dependents. 

[End of graph] 

Where the United States Ranks on Selected Health Outcome Indicators: 

Outcome: Life expectancy at birth (U.S. = 77.8 years in 2004);
Rank: 23 out of 30 in 2004. 

Outcome: Infant Mortality (U.S. = 6.8 deaths in 2004); 
Rank: 26 out of 30 in 2004. 

Outcome: Potential Years of Life Lost( U.S. = 5,066 in 2002); 
Rank: 23 out of 26 in 2002. 

Source: OECD Health Data 2006 and 2007. 

Notes: Data are the most recent available for all countries. Life 
expectancy at birth for the total population is estimated by the OECD 
Secretariat for all countries, as the unweighted average of the life 
expectancy of men and women. Infant mortality is measured as the number 
of deaths per 1,000 live births. Potential years of life lost (PYLL) is 
the sum of the years of life lost prior to age 70, given current age-
specific death rates (e.g., a death at 5 years of age is counted as 65 
years of PYLL). 

[End of table] 

Issues to Consider in Examining Our Health Care System: 

The public needs to be educated about the differences between wants, 
needs, affordability, and sustainability at both the individual and 
aggregate level. 

Ideally, health care reform proposals will: 

* Align Incentives for providers and consumers to make prudent 
decisions about the use of medical services; 

* Foster Transparency with respect to the value and costs of care, and; 

* Ensure Accountability from insurers and providers to meet standards 
for appropriate use and quality; 

Ultimately, we need to address four key dimensions: access, cost, 
quality,and personal responsibility. 

Selected Potential Health Care Reform Approaches: 

Reform Approach: Revise the government’s payment systems and leverage 
its purchasing authority to foster value-based purchasing for health 
care products and services; 
Short-term action: [check];
Long-term action: [Empty]. 

Reform Approach: Consider additional flexibility for states to serve as 
models for possible health care reforms; 
Short-term action: [check];
Long-term action: [Empty]. 

Reform Approach: Consider limiting direct advertising and allowing 
limited importation of prescription drugs; 
Short-term action: [check];
Long-term action: [Empty]. 

Reform Approach: Foster more transparency in connection with health 
care costs and outcomes; 
Short-term action: [check];
Long-term action: [Empty]. 

Reform Approach: Create incentives that encourage physicians to utilize 
prescription drugs and other health care products and services 
economically and efficiently. 
Short-term action: [check];
Long-term action: [Empty]. 

Reform Approach: Foster the use of information technology to increase 
consistency, transparency, and accountability in health care; 
Short-term action: [check];
Long-term action: [Empty]. 

Reform Approach: Encourage case management approaches for people with 
chronic and expensive conditions to improve the quality and efficiency 
of care delivered and avoid inappropriate care. 
Short-term action: [check];
Long-term action: [Empty]. 

Reform Approach: Reexamine the design and operational structure of the 
nation’s health care entitlement programs—Medicare and Medicaid, 
including exploring more income-related approaches; 
Short-term action: [check];
Long-term action: [check]. 

Reform Approach: Revise certain federal tax preferences for health care 
to encourage more efficient use of health care products and services; 
Short-term action: [check];
Long-term action: [check]. 

Reform Approach: Foster more preventative care and wellness services 
and capabilities, including fighting obesity and encouraging better 
nutrition; 
Short-term action: [check];
Long-term action: [check]. 

Reform Approach: Promote more personal responsibility in connection 
with health care; 
Short-term action: [check];
Long-term action: [check]. 

Reform Approach: Limit spending growth for government-sponsored health 
care programs (e.g., percentage of the budget and/or economy); 
Short-term action: [Empty]; 
Long-term action: [check]. 

Reform Approach: Develop a core set of basic and essential services. 
Create insurance pools for alternative levels of coverage, as 
necessary; 
Short-term action: [Empty]; 
Long-term action: [check]. 

Reform Approach: Develop a set of evidence-based national practice 
standards to help avoid unnecessary care, improve outcomes, and reduce 
litigation; 
Short-term action: [Empty]; 
Long-term action: [check]. 

Reform Approach: Pursue multinational approaches to investing in health 
care R&D; 
Short-term action: [Empty]; 
Long-term action: [check]. 

[End of table] 

Moving the Debate Forward: 

The Sooner We Get Started, the Better: 

* The miracle of compounding is currently working against us; 

* Less change would be needed, and there would be more time to make 
adjustments. 

Our demographic changes will serve to make reform more difficult over 
time. 

Need Public Education, Discussion, and Debate: 

* The role of government in the 21st Century; 

* Which programs and policies should be changed and how; 

* How government should be financed. 

Three Key Illnesses: 

* Myopia; 
* Tunnel Vision; 
* Self-Centeredness. 

Four National Deficits: 

* Budget; 
* Balance of Payments; 
* Savings; 
* Leadership. 

Key Leadership Attributes Needed for These Challenging and Changing 
Times: 

* Courage; 
* Integrity; 
* Creativity: 
* Stewardship: 
* Partnership. 

Three Key Groups That Need to Increase Their Influence and Involvement: 

* The Business and Professional Community; 
* Young Americans; 
* The Media. 

[End of presentation] 

On the Web: 
Web site: [hyperlink, http://www.gao.gov/cghome.htm]: 

Contact: 

Chuck Young, Managing Director, Public Affairs: 
YoungC1@gao.gov: 
(202) 512-4800: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7149: 
Washington, D.C. 20548: 

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