Health Care Spending and the Aging of the Population

Health care spending has been growing as a share of national income, as a share of federal spending, and as a share of many consumers' income. Because people tend to use more health care as they age, many observers are concerned that an aging population will accelerate growth in health care spending, and that such growth will lead to economic and fiscal crisis. Over the next several decades, both national and federal spending on health care are expected to grow rapidly for two basic reasons. The first is changing demographics. As the share of older people in the population grows, health spending also will grow to reflect generally higher per capita health care costs for this population, compared with younger people. The second and more important reason is the rising cost of health care for all age groups. In the past, growing demand for health care products and services has been significantly more important than population aging in driving health spending upward. This trend is expected to continue with both older and younger people using more health care in the future than they do today. Growth in spending for health care is of particular concern to policymakers because Medicare and Medicaid already account for about 21% of federal spending.1 As the population ages, a growing share of Americans will receive health care under these programs, putting increasing pressure on the federal budget.2 Unchecked, this pressure is likely to affect public spending for other priorities, and also may affect economic growth. Source: Congressional Research Service, Library of Congress

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