Yesterday, CBO Director Peter Orszag testified before the Senate Budget Committee on the rising costs of health care. He emphasized that technological change in health care is the primary driver of health care cost, and not population aging. Furthermore, it is the rising cost of the health care that is the underlying cause of the nation's long-term fiscal challenge. In fact, spending on Medicare and Medicaid are projected to increase from today's 4 percent of GDP to 19 percent 2082, while the nation's total spending on health care will reach 49 percent of GDP in 2082 - up from today's 16 percent. So, although federal spending on Medicare and Medicaid will eat a larger portion on GDP, that spending is merely reflective of the much larger issue of the cost of health care for all Americans. Orszag's testimony ultimately underscores two very important points about the nation's long-term fiscal challenge:

1. Social Security is not part of the problem; health care costs are
2. The aging of the Baby Boom generation is not the problem; advances in health care technology are

CBO: Growth in Health Care Costs: Statement of Peter R. Orszag Director before the Committee on the Budget United States Senate January 31, 2008 CBO: Supporting Charts, Growth in Health Care Costs CBO: Technological Change and the Growth of Health Care Spending CBO: The Long-Term Outlook for Health Care Spending