levels. Chapter 9 then puts the spending and revenue pieces together to illustrate different ways to reach fiscal sustainability.

This chapter serves as the broad introduction to the detailed analyses in Chapters 5-9. It also outlines how the options can be assembled to produce an illustrative set of budget “paths” (or “scenarios). The purpose of presenting a set of options and paths is not to argue for a particular set of policies, but to highlight the range and magnitude of the choices that the nation has to confront in seeking a sustainable course for the budget. All of the options to adjust spending and revenues are changes relative to the study baseline, which is the path of the budget projected by the continuation of current policies; see Box 1-3 in Chapter 1.

SPENDING OPTIONS

Options for Medicare and Medicaid

The health care policy problem is extraordinarily difficult. From a budget standpoint, one of the greatest difficulties is the inability to estimate with any confidence how most of the widely discussed reform options, or combinations of them, will affect the future trajectory of health spending.

Although spending increases for federal health programs are driven in part by the same demographic forces as Social Security (i.e., the aging of the U.S. population), for other reasons health spending has grown and is likely to continue growing at a faster rate than the economy.

Any plan to change the health care system is likely to be highly complex. There is little agreement on an overall approach or even on incremental steps to limit spending. The budget savings from any single option or a combination of options are highly uncertain. In addition, if savings can be realized, there will be strong pressures to use the savings for improvements in health and to extend federal support to people who would not otherwise have adequate insurance or care.

Given the uncertainties about savings and recognizing the pressures for spending, the committee’s approach is to present an array of options that could, collectively, reduce cost growth; but we do not attribute savings to any particular option or strategy for Medicare and Medicaid. The resulting paths for health spending are essentially a range of guesses as to the potential effectiveness of any change. As described in Chapter 5, at least in the short run, achieving any significant savings in Medicare and Medicaid with some measure of certainty will most likely require strong measures that directly control their costs in order to slow their rate of spending growth. Such measures could take several forms. The high cost of health care in the United States compared with other industrialized countries certainly suggests that the nation can provide care more efficiently than it currently



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