Technical Notes on Triangle of Painful Choices

The triangle of painful choices was first introduced in August 2012 as a tool to provide insights about what rate of growth in health spending would be sustainable in the long term. It was based on the federal government commitment, under the Affordable Care Act (ACA), to make adequate health insurance affordable to everyone (by expanding Medicaid to all low-income individuals, subsidizing the purchase of private insurance for those not eligible for Medicaid but unable to afford the full cost of insurance, and continuing Medicare coverage for the elderly). The faster the rate of growth in health care costs, the more difficult it becomes for the government to live up to this commitment as federal health spending is pushed above its ability to pay. A sustainable rate of growth is one that keeps federal health spending within the government’s ability to pay. Rates higher than this are unsustainable in the sense that government would have to abandon its ACA commitment and health insurance would become increasingly unaffordable and inadequate.