Can artificial intelligence be transformative enough to solve one of the U.S. economy’s biggest problems: the soaring budget deficit? According to three economists at the Brookings Institution, the answer is yes. AI could pose a positive “significant shock” to a country’s fiscal health.
a Working paper released last month The Brookings Center for Regulation and Markets estimates that under the most optimistic scenario, AI could reduce the annual U.S. budget deficit by 1.5% of gross domestic product, or about $900 billion in nominal terms, by 2044, reducing the annual budget deficit by 1.5% by 2044. We predict that this can be reduced. At the end of the 20-year span, it decreases by about a fifth.
“The use of AI offers a rare and perhaps unique opportunity to reduce the burden on traditional health systems, while at the same time expanding access to health information and services,” said study authors Ben Harris and Neil. -Mehotra and Eric So wrote.
The authors highlight the potential of AI to dramatically improve medical services and public health, citing various channels through which AI can improve productivity.
AI not only makes U.S. health care more efficient, it also has the potential to “democratize” access to the system by giving people more options for preventive care, and “the who” and “where” of health care. The economists wrote that there is a possibility that
AI could ease budget deficit pressures
A more efficient health care system in the economy and more tools for individuals to take control of their health would help reduce the government’s budget deficit, which exceeded $1.8 trillion in the fiscal year that ended Sept. 30. The pressure may be relieved. National debt reaches $36 trillion.
However, the introduction of AI in healthcare services is not certain. There are many obstacles to widespread adoption of AI, primarily related to regulation and incentives.
Ajay Agrawal, a professor at the University of Toronto’s Rotman School of Management who studies the economics of artificial intelligence, said economists’ outlook on AI and health care is “a mix of enthusiasm and despair.”
“Enthusiasm is growing because there is probably no field that could benefit more from AI than healthcare.…But there are frictions due to regulation and incentives, and because of the way things are structured and how people pay for them. There are also regulatory frictions and associated risks and responsibilities,” Agrawal said.
“Yes, there are many challenges to implementation, but at the same time, the rewards for making this successful are huge,” Agrawal said.
medical care and deficit
Statistics show that the federal government will spend an estimated $1.8 trillion on health insurance in 2023, about 7% of GDP. Congressional Budget Office. CBO projects that from 2024 to 2033, federal subsidies for health care will total $25 trillion, or 8.3% of GDP.
The problem is that much of the US health care spending is not tied to treatment or patient outcomes. Instead, it is estimated that around a quarter of public and private spending is spent on: Management functions.
“Productivity has increased significantly in nearly every U.S. industry over the past 50 years, with one major exception: health care,” according to a report by McKinsey analysts.
Economists at the Brookings Institution say this is one area where AI has the potential to improve operations. Basic tasks such as appointment scheduling can be automated, and tasks such as patient flow management and proactive data analysis can also be performed by AI programs.
Although the three economists acknowledged that the impact of AI on federal spending is still “highly uncertain,” the co-authors believe that AI will ultimately I believe that it has the potential to bring about greater economic change than any technological breakthrough. The current AI shock “feels different. This is not a typical technology shock,” Harris told CNBC.
AI is impacting “the way people receive health care,” the way the pharmaceutical industry discovers new products and the way researchers make medicine more accurate, Harris said.
disease and mortality
In particular, Harris emphasized that AI has the potential to transform healthcare costs, morbidity, morbidity, and mortality, as well as its impact on productivity.
“Such changes could have significant effects on spending for social security and public health programs,” he and his coauthors wrote.
Indeed, if advances in AI increase life expectancy, it could counterintuitively lead to increased federal spending. Improving technology not only allows people to receive more medical care, but also increases the number of retirees as people live longer.
But the Brookings paper takes a more optimistic stance, predicting that one of the biggest benefits of AI will come from accelerating the effectiveness of preventive care and disease detection. This could create a healthier population with fewer medical interventions, the authors write, and could also increase labor force participation rates if healthier workers remain employed longer.
“AI’s ability to improve diagnostic accuracy can not only improve patient outcomes but also reduce wasteful spending on inappropriate treatments,” the economists said. “From a more optimistic perspective, existing AI systems have the potential to reduce all healthcare spending, including Medicare, with cost savings occurring through several channels, of which personalized medicine is a prominent example. Masu.”
Agrawal said the assessment of whether AI will ultimately result in a positive or negative shock to fiscal policy will depend on which stage of the age distribution it affects. Agrawal said the answer to what the numbers will be will be whether AI is having “a big impact on retirees or a big impact on people who are working.”
AI is already widespread
So far, diagnostics has made the most progress and shows the greatest potential in the application of AI in medicine. Agrawal cited the impact of AI in nearly every step of diagnostic care, from receiving input data, medical images such as X-rays and MRIs, and physician records and charts.
“In almost every area of diagnostics, AI has already demonstrated so-called ‘superhuman performance,’ in some cases better than most doctors,” Agrawal said.
AI also shows “huge potential” to better optimize patient treatment plans through data analysis. According to the study’s authors, machine intelligence can create more effective and lower-cost plans for individual patients.
Agrawal believes it is too early to tell whether public or private healthcare systems will make more use of AI. In the U.S., private insurers have generally become more enthusiastic about AI technologies related to preventive care, he said. He said interest in using AI for diagnostic purposes is waning, which could likely lead to increased case numbers and increased treatments.
“There is no clear economic incentive for the private sector. [implement] “In the public sector, although there are incentives, there are a lot of frictions around privacy on the data side,” Agrawal said.
He believes public-private partnerships are key to driving the deployment of AI across healthcare.
The public health sector “needs very strong incentives to drive change, because otherwise everyone just goes about their business as usual. There’s a lot of resistance to change,” Agrawal said. Ta.
“So you need very strong incentives to overcome that resistance. The private sector generally has a much stronger incentive, either because the users are trying to reduce costs or because the creators of the technology are trying to generate profits. “It provides a powerful incentive,” he said. continued.
Leading technology companies are already developing large-scale language models specifically for medical services. Google’s AI system, Articulate Medical Intelligence Explore (AMIE), mimics diagnostic interactions. the Med Gemini The platform uses AI to aid in diagnosis, treatment planning, and clinical decision support. Amazon and microsoft We have a unique project underway to expand the application of AI programs in healthcare services.
Prospects under the Trump administration
President-elect Donald Trump’s second term could change the deployment of AI in healthcare and ultimately its economic impact. President Trump has pledged to cut government spending and created an external commission called the Department of Government Efficiency.Dismantle government bureaucracy, reduce excessive regulation, cut wasteful spending, and reorganize federal agencies.“Public health funding is one area where funding may be cut, hampering the deployment of AI applications.
“If the federal government’s role in providing health care for people is regressed, more efficient AI could offset the cost of that reversal,” Harris said. “If AI means a dollar goes further, I think we kind of timed it all in a lucky way.”
It is also possible that the rollback of regulations under the second Trump administration will accelerate the introduction of AI across healthcare.
“Many people are afraid of relaxing regulations because they don’t want immature technology coming into the health care system and harming people,” Agrawal said. “And that’s a very legitimate concern. But what they very often don’t put into the equation is the harm that we’re causing people by not bringing in new technology,” he said. added.
“While some areas require further technology development, there are others in diagnostics that are already ready and the only thing preventing their use is regulation,” Agrawal said.
