Out-of-control healthcare spending straining budget.

• Author: Gropman, Alan L.
• Position: INDUSTRY STUDY

Healthcare in the United States is a $2 trillion industry that soaks up about 16 percent of the gross domestic product. The rising cost of healthcare puts great pressure on the federal budget, and managing this strain in the next decade and beyond will probably affect the government's ability to satisfy other discretionary spending requirements including national defense, according to a study by the Industrial College of the Armed Forces.

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As healthcare costs rise, funds will increasingly be diverted from other priorities such as defense, homeland security, education, energy and transportation, the study says.

Few sectors of the U.S. economy are as frought with political anxiety as healthcare, asserts the study, which was written by a group of military and civilian students at ICAF last year. "The United States has the best healthcare in the world for some, but also has dismal life expectancy and child mortality statistics, and is spectacularly expensive."

Controlling costs and expanding access are perhaps the greatest challenges facing the U.S. healthcare industry in the first quarter of the 21st century. The United States has a mature...