Context for Medicare

Chapter summary Medicare payment policies must be considered in the broader context of the nation’s health care system—including spending, delivery of care, access to and use of services—and pressure on federal and state budgets. Health care accounts for a large and growing share of economic activity in the United States, nearly doubling as a share of gross domestic product (GDP) in the period between 1980 and 2011, from 9.2 percent to 17.9 percent. Growth in spending slowed somewhat in 2010 and 2011. Though the causes of this slowdown are debated, the economic downturn beginning in 2008 has likely had an effect on health care spending, since fewer people have insurance and those with insurance may delay care because of cost concerns. The level of and growth in health care spending significantly affect federal and state budgets since government payers directly sponsor nearly half of all health care spending. If this spending continues to consume an increasing share of federal and state budgets, spending for other public priorities could b