Skip to main content

Advanced Search

Advanced Search

Current Filters

Filter your query

Publication Types



Newsletter Article


CBO Report: Technological Advances Responsible for High Health Care Spending

By Reed Cooley, CQ Staff

February 5, 2008 -- A new report by the Congressional Budget Office (CBO) has identified rapid technological advances as the single biggest factor in the substantial rise in health care spending in the United States.

Health care spending has tripled twice over the past 40 years, causing it to account for nearly 15 percent of the Gross Domestic Product (GDP) in 2005 compared with only 5 percent in 1965, according to the report, released late last month. About half of this growth is attributable to advances in technology, it said.

The CBO asserts that advances in technology contribute to an increase in spending growth, largely because of overspending and overprescribing. "Newer, more expensive diagnostic or therapeutic services are sometimes used in cases in which older, cheaper alternatives could offer comparable outcomes," it said.

As a result, the growth has caused per capita spending in the United States to reach rates much higher than those of many other industrialized countries, making health coverage unaffordable for many Americans, the report found.

"For people who lack group coverage and are not eligible for public programs, higher per capita health care spending can make individual private coverage prohibitively expensive," it said.

The CBO predicts that health care spending will continue to grow in proportion to overall GDP reaching 31 percent by 2035 and 49 percent by 2082. Medicare and Medicaid will grow to account for over one third of that spending.

The report indicates that the "nation's long-term fiscal balance is at stake . . . Current policies governing spending on Medicare and Medicaid will be unsustainable in the decades to come if historical patterns . . . continue."

The CBO proposes using comparative effectiveness to decide, more selectively, which new technologies should be incorporated into the health care system to gauge what services offer the clinical benefits that justify the increase in cost.

The Advanced Medical Technology Association (AdvaMed) expressed concern that such use of comparative effectiveness research could deny some patients appropriate care.

"It is clear that limiting patient access to safe and effective treatment based on averages is not sound policy let alone sound health care," AdvaMed said in a statement released Thursday.

The statement found that advances in technology have led to a decrease in disability among older Americans that it said would save Medicare $73 billion annually by 2009.

The CBO report projects federal spending on Medicare and Medicaid to make up nearly 20 percent of GDP by 2082 if no comparative effectiveness policy is enacted.

Publication Details