Unchecked health costs imperil U.S. economic stability, budget official says

April 17, 1991|By Knight-Ridder News Service

WASHINGTON -- Runaway health costs are jeopardizing the nation's long-term economic stability and sinking the federal government into deeper debt, Bush administration budget director Richard G. Darman told Congress yesterday.

By 2030, America will be working largely to pay its doctor bills if present trends continue, predicted Mr. Darman, director of the Office of Management and Budget. Health spending will overtake Social Security as the biggest item in the federal budget by the turn of the century, he said.

Health care now accounts for 12 percent of the nation's $5 trillion annual output of goods and services. If left unchecked, health spending will gobble up 37 percent of the gross national product by 2030, according to Mr. Darman's figures.

"I would contend that is just not realistic," Mr. Darman told the Senate Finance Committee. "Somewhere, somehow, something is going to have to give."

Said Sen. John B. Breaux, D-La.: "It's not a question of whether we're headed for a big train wreck; it's just a question of when it's going to occur."

The tax-writing Finance Committee, chaired by Sen. Lloyd Bentsen, D-Texas, has been holding hearings into the double-edged problem of escalating medical costs and lack of health coverage for more than 30 million Americans.

The administration had originally promised a national health care strategy by the end of last year. But Mr. Darman said the problem was so complex that the strategy might take 18 months longer -- a timetable that suggests that it may not happen during President Bush's current term.

Several corporate executives have urged the committee to support a national cap on health spending that would be binding on government and private business.

But Mr. Darman said that such an approach could lead to rationing. He said he favored a strategy that encouraged competition among doctors, hospitals and insurance companies to provide the most complete services at the lowest cost.

Mr. Darman said that a "respectable case" could be made either for government intervention or for a strategy that stressed competition.

"The least responsible course is to remain in the middle -- where we are," he said.

Mr. Darman said he could foresee a situation in which the government would raise the retirement age or cut back on health care subsidies for all but the poor to hold down costs. Medicare coverage for the elderly now begins at age 65.

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