Health care expenditures are on an unsustainable path, Stanford Health Policy Director Alan Garber noted, exceeding 16 percent of GDP, while Medicare, the single largest cost component, could consume 10 percent of the nation's output on its current trajectory. In this FSI Director's seminar, Garber, a physician, economist, and professor of medicine, explored major cost savings proposals and key features of the reform plans now being debated in the Congress.

Major cost saving ideas, he said, include greater transparency in cost and quality; widespread adoption of health care information technology; more emphasis on prevention; disease management; and lower drug costs. Key features of the reform plans now being debated include health insurance exchanges, where insurers compete on cost and quality; comparative effectiveness research, employing cost-benefit analysis for medical devices and procedures; an independent Medicare Advisory Commission; a mandate for individual health insurance; and an employer mandate.

Most of the $829 billion in proposed new spending, he noted, would go for an expansion of Medicaid ($345 billion) and for subsidies to help the poor buy insurance ($461 billion). These costs would be offset by new taxes, fees, and anticipated cuts in Medicare, so projected budget deficits would be $81 billion lower over the coming decade.