Rapidly rising healthcare costs are not simply a federal budget problem - they are America's number one fiscal challenge, according to David M. Walker, Comptroller General of the United States.
Walker testified Wednesday before the Senate Budget Committee as it prepared for a mark-up of an emergency economic stimulus package.
"If there is one thing that could bankrupt America, it's runaway healthcare costs," he said. "We must not allow that to happen."
According to the GAO, public and private healthcare spending is running rampant due to increased medical prices and increased use due to growth in the number, or volume, of services per capita. The use of more intense and complex services is also a problem.
To make matters worse, Walker said, consumers are insulated by third-party payers from learning about the cost of healthcare or what care is best.
From 1976 through 2006, public and private spending on healthcare grew from about 8 percent to 16 percent of the Gross Domestic Product. Healthcare spending is projected to grow to about 20 percent of the GDP by 2016, Walker added.
"A major difficulty is that our current system does little to encourage informed discussions and decisions about the costs and value of various health care services," he said. "These decisions are very important when it comes to cutting-edge drugs and medical technologies, which can be very expensive but offer no advantage over their alternatives. In some cases, new technology can lead to over-diagnosis and the excessive use of resources."
Despite spending far more of its economy on healthcare than other nations, the United States has an above-average infant mortality rate, a below-average life expectancy rate and the largest percentage of uninsured individuals, Walker said.
According to Walker, Medicare and Medicaid spending threaten to consume an unsustainable share of the budget in coming decades.
"The federal government has essentially written a blank check for these programs," he said. "In contrast, other industrialized nations have put their healthcare programs on a budget, even ones with national healthcare plans. We should consider imposing limits on federal spending for healthcare sooner rather than later."
Walker said if programs designed to pay for Medicaid and Medicare are factored into the total current U.S. debt, that price tag would soar to about $53 trillion. In real terms, it would take an investment and savings of approximately $455,000 per American household, or $175,000 for every man, woman, and child, to settle the bill, he said.
Senate Budget Committee Chairman Kent Conrad (D-N.D.) said the federal government should try different approaches to reforming its healthcare system to see what works, then readjust as it goes.
"The sooner we start that, the better off we're going to wind up being," he said.
Conrad said he and ranking member Senator Judd Gregg (R-N.H.) propose to force action by Congress this year by setting up a bi-partisan fiscal task force. Eight Democrats and eight Republicans would be appointed to the group, which would be compelled to pass a fiscal recovery bill by at least 12 votes.
Conrad said any bill coming from the task force would already have bipartisan consensus and, in an unprecedented fashion, would go straight to an open vote in Congress.