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US Health Costs Will Continue to Rise With or Without Reform


President Obama says it's time for Congress to act to reduce the cost of health care and ensure that all Americans have access to good quality, affordable health care. But many critics say the president's plan is too costly and threatens an economy still reeling from the worst recession since the Second World War. Others say the cost of doing nothing would be worse.

Americans spend $2.25 trillion a year on health care - a huge sum that experts say will double in the next 10 years.

Even if nothing is done to rein in costs, Norman Ornstein at the American Enterprise Institute says the problem will only get worse.

"The uncertainty, the higher costs every year, the changes in behavior every year, the reduced options - all come with no change in the system," said Norman Ornstein.

That's because health spending has been rising faster than American paychecks.

According to the Health and Human Services Department, total health costs have risen from nearly six percent of the nation's GDP (Gross Domestic Product) in 1965 to 17 percent in 2008.

At the current pace, some warn health-care could eat up as much as 41 percent of income by the year 2036, driving more Americans to drop their coverage.

Addressing members of Congress on Wednesday, President Obama said maintaining the status quo is not an option.

"Everyone in this room knows what will happen if we do nothing; our deficit will grow, more families will go bankrupt, more businesses will close," said President Obama.

But some private insurers say the president's proposal amounts to a government takeover of health care.

"We're creating a new government-run program that is going to swallow up everything else," said Karen Ignani, who heads a private coalition of health insurance companies.

Some economist say that's not true.

Research analyst Anne Mathias says that's like saying the U.S. Postal Service will drive Federal Express out of business.

"Can you think of any government-run company that has been able to drive a big, private-sector company completely out of business," she asked.

But with a price tag of nearly $1 trillion over 10 years, critics argue health reforms could derail an already fragile economic recovery.

Economist Mark Zandi admits it's a gamble, but one the president has to make.

"Health care reform has to reduce the growth in health care costs in the long run," said Mark Zandi. "And when I mean the long run, I mean 10, 20, 30, 40, 50 years. If we don't do that, then our budget problems, our fiscal problems are going to be incredibly severe and significant.

Zandi says the nation's inability to address the challenges arising from higher health care costs could ultimately damage investor confidence, further weakening prospects for a full economic recovery.

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