Friday, January 15, 2010

A Percentage Point Here and a Percentage Point There and Soon You're Talking Real Money

“The news that Americans have stopped getting fatter -- but are still pretty fat -- is a nice opportunity to distinguish things that change how much we spend next year from how much we spend 10 years from now. There are two things going on with health-care costs. The first is that we spend a lot right now. In 2008, we clocked in at $2.3 trillion. That's a lot of money. But the other problem is that that sum is growing by quite a bit every year. A normal year sees 8% or so growth. We can afford $2.3 trillion. We can't afford $2.3 trillion after 20 years at 8% growth (which would be $10.7 trillion, if my calculations are correct). To get costs under control, we have to change the 8%, not the 2.3 trillion. To make this clearer, let's say we do some serious cost control and cut $200 billion from the system next year...

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