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Selected research from leading health care experts whose findings have a direct bearing on public policies effecting medical progress. Research is chosen based on its quality and relevance by the Medical Progress Today editorial staff.

Selected Research

Comparing Government Healthcare Costs in Ten OECD Countries
National Bureau of Economic Research Digest, 7-1-06

The National Bureau of Economic Research Digest recently summarized the research of two leading economists from a December 2005 NBER paper on OECD health care costs. The researchers caution that if expenditures on public health benefits continue to rise at historic rates in OECD nations (i.e., faster than GDP growth), the added costs (through increased taxes) will hurt economic development. The authors also explain why the U.S., among the OECD nations, faces the most severe fiscal challenges from rising public health expenditures.

Assuming that benefits will continue to grow at historic rates for the next 20, 40, or 60 years, Kotlikoff and Hagist "age" the population to determine the present value of projected government health spending as a fraction of the present value of projected GDP. Assuming that benefit levels grow at historic rates for the next 40 years and then grow at the same rate as per capita GDP and assuming a 7 percent discount rate, the United States, Norway, and Germany are slated to spend around 12 percent of their future output on government health spending. At a 3 percent discount rate, the U.S. government will spend around 19 percent of future GDP on health, followed by Norway at 17 percent, and Japan at 13 percent.

Because "American's elderly are politically very well organized, and each cohort of retirees has, since the 1950s, used its political power to extract ever greater transfers from contemporaneous workers," the authors conclude that the fiscal fallout of expanding healthcare benefits is likely to be "particularly severe" for the United States, imposing "a huge additional fiscal burden on the American public.



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