Improving the performance of our health-care system is without a doubt one of the most important challenges that our nation faces. In recent decades, improvements in medical knowledge and standards of care have allowed people to live healthier, longer, and more productive lives. New medical technologies and treatments promise more and better to come. From a social point of view, we hope as many people as possible benefit from these advances. But health care is not only a scientific and social issue; it is an economic issue as well. The decisions we make about health-care reform will affect many aspects of our economy, including the pace of economic growth, wages and living standards, and government budgets, to name a few.
By any measure, the health-care sector represents a major segment of our economy. Spending on health-care services currently exceeds 15 percent of the gross domestic product (GDP). Indeed, health-care spending is the single largest component of personal consumption--larger than spending on either housing or food. Importantly, health care also has long been, and continues to be, one of the fastest-growing sectors in the economy: Over the past four decades, this sector has grown, on average, at a rate of about 2-1/2 percentage points faster than the GDP. Should this rate of growth continue, health spending would exceed 22 percent of GDP by 2020 and reach almost 30 percent of GDP by 2030.1
Health-related spending is also a large and growing share of government budgets. Last year, health care accounted for about one-quarter of total federal spending. The Congressional Budget Office (CBO) projects that, under current policies, health spending will account for almost one-half of all federal non-interest outlays by 2050.2
As the public interest in these issues testifies, the stakes associated with health-care reform, both economic and social, are very high. But we must keep in mind that, for all its problems, the U.S. health-care system also has many strengths. We must take care that we do not lose what is good about our system as we try to address the significant concerns that certainly exist.
In the remainder of my remarks, I will discuss three key challenges for health-care reform. These challenges are, in short, the issues of access, quality, and cost.
Challenges for Health-Care Reform
Access
Access to health care is the first major challenge that health-care reform must address. In 2006, a total of 47 million Americans, or almost 16 percent of the population, lacked health insurance. Although the federal and state governments spent more than $35 billion to finance uncompensated care in 2004, the evidence nonetheless indicates that uninsured persons receive less health care than those who are insured and that their health suffers as a consequence. Per capita expenditures on health care for uninsured individuals are, on average, roughly half those for fully insured individuals.3 People who are uninsured are less likely to receive preventive and screening services, less likely to receive appropriate care to manage chronic illnesses, and more likely to die prematurely from cancer--largely because they tend to be diagnosed when the disease is more advanced.4 One recent study found that uninsured victims of automobile accidents receive 20 percent less treatment in hospitals and are 37 percent more likely to die of their injuries than those who are insured.5
Quality
The second key challenge is improving the quality of health care. The quality of medical research, training, and technology in the United States is generally very high. However, the quality of health care is determined not only by, say, technological advances in preventing and treating disease but also by our ability to deliver the benefits of those advances to patients. For maximum impact, advances in medical knowledge must be widely disseminated and consistently and efficiently implemented. But evidence suggests a disturbing gap between the quality of health services that can be provided in principle and the quality of health services that actually are provided in practice. For example, in 2000, the Institute of Medicine issued a landmark report that concluded that up to 98,000 Americans died each year in hospitals as a result of medical errors.6 Many of the errors identified by the report--for example, errors caused by adverse drug events, improper transfusions, wrong-site
