Will Medical Care Strangle or Save the Federal Budget?

Forecasts of the federal budget depend greatly on trends in medical spending. Since 1970, medical spending has nearly tripled as a share of gross domestic product (GDP). However, spending growth has barely exceeded GDP growth since 2010. This difference in growth rates makes forecasting spending difficult. I present scenarios for future spending derived from considering the sources of spending increase, ranging from rapid increases in new, expensive treatments to a reduction in spending due to cost-reducing technology. Even modest increases in spending relative to GDP are likely to overwhelm the federal government’s ability to pay for medical care using current tax instruments.