President Obama: The rising cost of health care is “the single, most pressing fiscal challenge we face, by far….”

From the opening remarks at the Fiscal Responsibility Summit convened by the President, today, in Washington, D.C.

“If we do not change current policies, the national debt, which now equals about 45 percent of the gross domestic product, will soar to about 300 percent of GDP by the year 2050. By then, interest payments on the debt alone would consume 14 percent of GDP — more than we spent on Medicare, Medicaid, Social Security and all other entitlements combined.

“We must avoid such an explosion of debt. To do that, we must make sure that the debt does not consistently [grow] faster than the overall economy which, in turn, means that over time annual deficits should not average more than 2 to 3 percent of GDP.But under current policies, even after the economy starts to grow again, deficits will never fall below 4 percent of GDP, and eventually will go much higher. So, we are on the path to the very debt explosion we must avoid.

“What’s driving this problem? Let me start with what’s not driving it. First, the recent Economic Recovery Package is not driving the problem. That package is temporary and it increased the size of the long-term fiscal gap by only about one-tenth of 1 percentage point of GDP. Its costs are dwarfed by the bigger, longer lasting factors I’m about to describe.

“Second, entitlement programs in general are not driving the problem. Entitlements other than the three big ones, Medicare, Medicaid and Social Security, have actually been falling as a share of the economy and will continue to do so.

“So, what is driving the problem? The increases projected in federal spending in coming decades as a share of the economy are due entirely to the projected growth in Medicare, Medicaid and Social Security which, in turn, is driven by rising health-care costs and the aging of the population.The single biggest factor is rising health-care costs, not just in Medicare and Medicaid, but throughout our health-care system.

“For more then 30 years, costs per patient in Medicare, Medicaid, and private healthcare have all risen at about the same rate, and much faster then the economy.

“If healthcare costs per patient were somehow to rise at the same rate that the economy grows on a per capita basis, rather than growing faster, the vast majority of the long-term fiscal gap would disappear. So we face a daunting systemwide healthcare problem.” (I added the emphasis.)

Remarks of Robert Greenstein, Founder and Executive Director of the Center on Budget and Policy Priorities. Transcription from the NYTimes February 23, 2009.

Video of the opening session here. Transcript here.