Updated CBO Estimates on Health Care
The Congressional Budget Office released its updated baseline budget outlook this morning – which included a projection that this year’s budget deficit will total a record $1.5 trillion. The document also included several relevant facts on health care:
- A long-term “doc fix” freezing Medicare payment rates at 2011 levels would raise the deficit by $249 billion, not counting an additional $53 billion in debt service obligations. (Table 1-7, p. 21)
- Insurance subsidies through the exchanges will result in $524 billion in spending over the 2012-2021 period, and $94 billion in spending in fiscal year 2021 alone. (The lower 10-year number comes from the fact that the subsidies take time to “ramp up” once the exchanges come online in 2014.) (Table 3-3, p. 58)
- Medicare is projected to grow by 7 percent in 2011 – and by 7 percent on average in the coming decade. “CBO projects that, under current law, Medicare spending will rise as a share of GDP from 3.6 percent in 2012 to 4.3 percent by 2021. By that time, gross Medicare outlays will exceed $1.0 trillion.” (Page 62)
- Spending on Medicare, Medicaid, and other mandatory federal health programs “will reach $870 billion in 2011, or 5.8 percent of GDP. In CBO’s baseline projections, spending for health programs more than doubles between 2011 and 2021, rising by an average of about 7 percent per year and reaching $1.8 trillion in 2021. That spending is projected to represent 7.4 percent of GDP In 2021 – a jump of 1.6 percentage points from its share in 2011.” (Page 61)
The overall conclusion from CBO:
America’s Current Entitlements are Unsustainable – and Health Care Reform Did Nothing to Alleviate This Trend: “Spending on the government’s major mandatory health care programs—Medicare, Medicaid, CHIP, and health insurance subsidies to be provided through the new insurance exchanges—along with Social Security will increase from roughly 10 percent of GDP in 2011 to about 16 percent over the next 25 years. If revenues stay close to their average share of GDP for the past 40 years, that rise in spending will lead to rapidly growing budget deficits and surging federal debt.” (Page 25)