The rate of growth in health care outlays is greater than the rate of growth in the budget itself. The poses a problem, because the federal budget deficit is increasing in size. Debt service is going to be the most rapidly growing component of the federal budget over the next several years, highlighting the need to control costs in all aspects of the budget. The challenge, however, is that both demographic trends and health care cost inflation trends signal a dramatic increase in health care costs in the coming couple of decades. Health care reform is expected to help with cost containment, primarily through shifting some eligibility requirements, but greater solutions are required. Privatizing health care would take if off the government's books, but would have significant negative externalities with respect to public health. Implementing greater cost controls is manageable even in the current political climate....

Using the market power of Medicare to contain drug costs is one element of strategy that can be implemented without legislative action. A streamlined process for approving biosimilars would help to decrease outlays for biologic treatments. Capping malpractice insurance payouts would reduce the increase in doctor's fees by lowering their cost structure. These three additional strategies can contribute to an environment in which the rapid escalation in health care costs is stemmed. This may not entirely solve the problem given the demographic situation, but it will contribute to containing health care costs and therefore should assist with the federal deficit.
Works Cited:

Budget of the U.S. Government, fiscal year 2011. Retrieved December 9, 2010 from http://www.whitehouse.gov/sites/default/files/omb/budget/fy2011/assets/budget.pdf

CBO. (2010). HR 4872. Congressional Budget Office. Retrieved December 9, 2010 from http://www.cbo.gov/ftpdocs/113xx/doc11355/hr4872.pdf

Klein, E. (2010). Rep. Ryan proposes radical solution to budget problem. Washington Post. Retrieved December 9, 2010 from http://www.washingtonpost.com/wp-dyn/content/article/2010/02/05/AR2010020504796.html