Taxes and health insurance

Abstract

The single most important factor influencing the federal government's long-term fiscal balance is the rate of growth in health care costs. Without any changes in federal law, the Congressional Budget Office projects that total spending on health care will rise from 16 percent of the GDP in 2007 to 25 percent in 2025 and 49 percent in 2082 and that net federal spending on Medicare and Medicaid will rise from 4.5 percent of GDP to almost 20 percent of GDP over the same period.1 Many of the other issues central to the debate on future fiscal conditions, from the actuarial deficit in Social Security to whether the 2001 and 2003 tax legislation is continued past its scheduled expiration in 2010, pale by comparison to growth in the cost of federal health insurance programs.