David Leonhardt's column on the cost of health care in yesterday's NYT included a very nice little chart produced by Peter Orszag, the new director of the Congressional Budget Office (CBO). The chart shows the projected growth of Medicare and Medicaid spending under the assumption that the cost of these programs only rises due to aging. The chart shows a very modest increase over the next two decades. Then the chart shows the baseline projections, which assume that per capita health care costs will continue to rise at the same rate as they have been. The difference is about 5 percentage points of GDP, which would be about $700 billion a year at current output levels. This is the budget crisis. It's good that we have a director of CBO who sees it as part of his job to educate the public about the nature of the budget problems facing the country. Now if we can just get the reporters who cover the topic to listen to him.
--Dean Baker
