Health Care and the Federal Budget

1. Congressional Budget Office
2015 Health Care Forecast Conference
University of California, Irvine
February 19, 2015
James Baumgardner
Deputy Assistant Director
Health Care and the Federal Budget

2. 1C O N G R E S S I O N A L B U D G E T O F F I C E
Analysis of Premium Support Options

3. 2C O N G R E S S I O N A L B U D G E T O F F I C E
Key Operations Under the Illustrative Second-Lowest-Bid
Option for Premium Support

4. 3C O N G R E S S I O N A L B U D G E T O F F I C E
Key Operations Under the Illustrative Second-Lowest-Bid
Option for Premium Support (Continued)

5. 4C O N G R E S S I O N A L B U D G E T O F F I C E
Effects of Options on Spending for Medicare Benefits

6. 5C O N G R E S S I O N A L B U D G E T O F F I C E
Average Annual Premiums Charged by Plans for Medicare Part A and B
Benefits Under Illustrative Premium Support Options, by
Fee-for-Service Spending in a Region, Weighted by Population, 2020
Dollars

7. 6C O N G R E S S I O N A L B U D G E T O F F I C E
The Ten-Year Budget Outlook

8. 7C O N G R E S S I O N A L B U D G E T O F F I C E
CBO’s Baseline Budget Projections, in Billions of Dollars
Total
Actual, 2016- 2016-
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2020 2025
Revenues 3,021 3,189 3,460 3,588 3,715 3,865 4,025 4,204 4,389 4,591 4,804 5,029 18,652 41,670
Outlays 3,504 3,656 3,926 4,076 4,255 4,517 4,765 5,018 5,337 5,544 5,754 6,117 21,540 49,310
____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ _______________ _______________ _______________
Deficit -483 -468 -467 -489 -540 -652 -739 -814 -948 -953 -951 -1,088 -2,887 -7,641
Debt Held by the Public
at the End of the Year 12,779 13,359 13,905 14,466 15,068 15,782 16,580 17,451 18,453 19,458 20,463 21,605 n.a. n.a.
Note: n.a. = not applicable.

9. 8C O N G R E S S I O N A L B U D G E T O F F I C E
CBO’s Baseline Budget Projections, as a
Percentage of Gross Domestic Product
Total
Actual, 2016- 2016-
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2020 2025
Revenues 17.5 17.7 18.4 18.2 18.1 18.1 18.0 18.1 18.1 18.2 18.2 18.3 18.1 18.2
Outlays 20.3 20.3 20.8 20.7 20.7 21.1 21.4 21.6 22.0 21.9 21.8 22.3 21.0 21.5
____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ _____________ _____________ _____________
Deficit -2.8 -2.6 -2.5 -2.5 -2.6 -3.0 -3.3 -3.5 -3.9 -3.8 -3.6 -4.0 -2.8 -3.3
Debt Held by the Public
at the End of the Year 74.1 74.2 73.8 73.4 73.3 73.7 74.3 75.0 76.1 76.9 77.7 78.7 n.a. n.a.
Note: n.a. = not applicable.

10. 9C O N G R E S S I O N A L B U D G E T O F F I C E
Components of the Total Increase in Outlays in
CBO’s Baseline Between 2015 and 2025
Total Increase in Outlays:
$2.5 Trillion
All Other Programs
(16%)
Net Interest
(24%)
Social Security
(28%)
Major Health Care
Programs
(32%)

11. 10C O N G R E S S I O N A L B U D G E T O F F I C E
Deficit Under Selected Alternatives
0
200
400
600
800
1,000
1,200
1,400
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Billions of Dollars
Baseline

12. 11C O N G R E S S I O N A L B U D G E T O F F I C E
Deficit Under Selected Alternatives (Continued)
0
200
400
600
800
1,000
1,200
1,400
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Billions of Dollars
Reduce the Number of
Troops Deployed Overseas
Baseline

13. 12C O N G R E S S I O N A L B U D G E T O F F I C E
Deficit Under Selected Alternatives (Continued)
0
200
400
600
800
1,000
1,200
1,400
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Billions of Dollars
Increase Discretionary
Appropriations at Inflation
Baseline

14. 13C O N G R E S S I O N A L B U D G E T O F F I C E
Deficit Under Selected Alternatives (Continued)
0
200
400
600
800
1,000
1,200
1,400
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Billions of Dollars
Maintain Medicare Physician
Payment at Current Rates
Baseline

15. 14C O N G R E S S I O N A L B U D G E T O F F I C E
Deficit Under Selected Alternatives (Continued)
0
200
400
600
800
1,000
1,200
1,400
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Billions of Dollars
Prevent Automatic Spending
Reductions of the
Budget Control Act
Baseline

16. 15C O N G R E S S I O N A L B U D G E T O F F I C E
Deficit Under Selected Alternatives (Continued)
0
200
400
600
800
1,000
1,200
1,400
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Billions of Dollars
Extend Expiring
Tax Provisions
Baseline

17. 16C O N G R E S S I O N A L B U D G E T O F F I C E
The Labor Force, Employment, and Unemployment
Percentage of the Population

18. 17C O N G R E S S I O N A L B U D G E T O F F I C E
Interest Rates on Treasury Securities
Percent

19. 18C O N G R E S S I O N A L B U D G E T O F F I C E
Effects of the Affordable Care Act on Health Insurance
Coverage, 2025
Millions of Nonelderly People
Current LawWithout the ACA
Exchanges
Medicaid and CHIP
Employment-Based
Nongroup and Other-4
-9
+16
Insured
Uninsured
-27
+24
0
50
100
150
200
250
300
0
20
40
60

20. 19C O N G R E S S I O N A L B U D G E T O F F I C E
The Long-Term Budget Outlook

21. 20C O N G R E S S I O N A L B U D G E T O F F I C E
Federal Debt Held by the Public

22. 21C O N G R E S S I O N A L B U D G E T O F F I C E
Number of People Age 65 or Older, by Age Group
1999 2004 2009 2014 2019 2024 2029 2034 2039
0
10
20
30
40
50
60
70
80
90
65 to 74
75 to 84
85 to 94
95 or Older
Actual Projected
Millions of People

23. 22C O N G R E S S I O N A L B U D G E T O F F I C E
Federal Spending on the Major Health Care
Programs, by Category
1999 2004 2009 2014 2019 2024 2029 2034 2039
0
1
2
3
4
5
6
7
8
Medicare
Medicaid, CHIP, and
Exchange Subsidies
Percentage of Gross Domestic Product
Actual Extended Baseline Projection

24. 23C O N G R E S S I O N A L B U D G E T O F F I C E
Debt Held by the Public, Total Spending, and Total Revenues

25. 24C O N G R E S S I O N A L B U D G E T O F F I C E
Components of Total Spending

26. 25C O N G R E S S I O N A L B U D G E T O F F I C E
Components of Total Revenues

27. 26C O N G R E S S I O N A L B U D G E T O F F I C E
Federal Debt Given Different Rates of Growth of Federal
Health Care Spending
1999 2004 2009 2014 2019 2024 2029 2034 2039
0
50
100
150
Extended Baseline
With Economic
Feedback
93
111
Higher Growth Rate132
Lower Growth Rate
Actual Projected
Percentage of Gross Domestic Product

28. 27C O N G R E S S I O N A L B U D G E T O F F I C E
Federal Debt Given DifferentRates of MortalityDecline,Productivity
Growth,Interest, and GrowthofFederalHealth Care Spending
1999 2004 2009 2014 2019 2024 2029 2034 2039
0
50
100
150
Extended Baseline With
Economic Feedback
75
111
All Four Factors Raise
Projected Deficits159
All Four Factors Lower
Projected Deficits
Percentage of Gross Domestic Product
Actual Projected

29. 28C O N G R E S S I O N A L B U D G E T O F F I C E
The Timing and Size of Policy Changes Needed to Make
Federal Debt Meet Two Goals
2025
2020
2015
0 1 2 3 4 5
Percentage of GDP
1.2
2.6
1.5
3.2
2.1
4.3
If action
begins
in . . .
Its average percentage of GDP
during the past 40 years (39 percent)
Its current percentage of
GDP (74 percent)
The annual reduction in noninterest spending or
increase in revenues would need to be this
percentage of GDP. . .
To make federal debt held by
the public in 2039 equal . . .

30. 29C O N G R E S S I O N A L B U D G E T O F F I C E
Notes
Slides 2 through 5: For more information, see A Premium Support
System for Medicare: Analysis of Illustrative Options (September 2013),
www.cbo.gov/publication/44581.
Slides 7 through 13: For more information, see The Budget and Economic
Outlook: 2015 to 2025 (January 2015), www.cbo.gov/publication/49892.
Slides 15 through 23: For more information, see The 2014 Long-Term
Budget Outlook (July 2014), www.cbo.gov/publication/45471. CBO’s
long-term projections were most recently published in July 2014; they
generally reflect current law, following the agency’s April 2014 baseline
budget projections through 2024 and then extending the baseline
concept into later years.