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Congressional Budget Office Health Care Spending Today and in the Future: Impacts on Federal Deficits and Debt Presentatio...
1CONGRESSIONAL BUDGET OFFICE An Overview of the Long-Term Budget Outlook
2CONGRESSIONAL BUDGET OFFICE If current laws governing taxes and spending did not change, the condition of the federal bud...
3CONGRESSIONAL BUDGET OFFICE Growth in federal spending would continue to outpace growth in federal revenues, leading to e...
4CONGRESSIONAL BUDGET OFFICE Federal Spending and Revenues Percentage of Gross Domestic Product Actual Projected
5CONGRESSIONAL BUDGET OFFICE As a result, debt would grow larger in relation to the economy than ever recorded in U.S. his...
6CONGRESSIONAL BUDGET OFFICE Federal Debt Held by the Public Percentage of Gross Domestic Product
7CONGRESSIONAL BUDGET OFFICE Federal spending is projected to rise notably in relation to the economy because of growth in...
8CONGRESSIONAL BUDGET OFFICE Components of Federal Spending Percentage of Gross Domestic Product 0 5 10 15 2000 2005 2010 ...
9CONGRESSIONAL BUDGET OFFICE Health Care Spending Today
10CONGRESSIONAL BUDGET OFFICE National Spending for Health Care, 2015 1 5 6 Medicare
11CONGRESSIONAL BUDGET OFFICE CBO defines outlays for the major health care programs as spending for: • Medicare, • Medica...
12CONGRESSIONAL BUDGET OFFICE Net Outlays for Major Health Care Programs in 2017 Medicare 590 Medicaid 385 Health Insuranc...
13CONGRESSIONAL BUDGET OFFICE Health Care Spending in the Long-Term Budget Outlook
14CONGRESSIONAL BUDGET OFFICE If current laws generally remain unchanged, CBO projects that federal spending on the major ...
15CONGRESSIONAL BUDGET OFFICE Spending in the Past and Under CBO’s Extended Baseline Percentage of Gross Domestic Product
16CONGRESSIONAL BUDGET OFFICE Spending on the major health care programs would account for 40 percent of federal nonintere...
17CONGRESSIONAL BUDGET OFFICE Composition of Federal Noninterest Spending Under CBO’s Extended Baseline Percent
18CONGRESSIONAL BUDGET OFFICE Spending on Medicare is projected to drive much of the growth in spending on major health ca...
19CONGRESSIONAL BUDGET OFFICE Federal Spending on the Major Health Care Programs, by Category Percentage of Gross Domestic...
20CONGRESSIONAL BUDGET OFFICE Two factors explain the projected growth in spending on major health care programs: aging an...
21CONGRESSIONAL BUDGET OFFICE Projected Spending Growth in the Major Health Care Programs Percentage of Gross Domestic Pro...
22CONGRESSIONAL BUDGET OFFICE Population, by Age Group Millions of People
23CONGRESSIONAL BUDGET OFFICE Uncertainty in the Long-Term Projection
24CONGRESSIONAL BUDGET OFFICE Even if future tax and spending policies matched the policies specified under current law, b...
25CONGRESSIONAL BUDGET OFFICE Federal Debt Given Different Rates of Excess Cost Growth for Federal Spending on Medicare an...
26CONGRESSIONAL BUDGET OFFICE This presentation will be available on CBO’s website, www.cbo.gov.
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Jul. 18, 2017

Health Care Spending Today and in the Future: Impacts on Federal Deficits and Debt

If current laws governing taxes and spending did not change, the condition of the federal budget would worsen considerably over the next three decades. Growth in federal spending would continue to outpace growth in federal revenues, leading to ever-larger budget deficits.

CBO projects that federal spending on the major health care programs would grow larger than spending in any other category if current laws generally remained unchanged. Driven particularly by growth in Medicare outlays, spending on those programs would account for 40 percent of federal noninterest spending in 2047, compared with 28 percent today. Two factors explain the projected growth in spending on major health care programs: aging of the population and rising health care costs per person (that is, excess cost growth).

Presentation by Jessica Banthin, Deputy Assistant Director in CBO’s Health, Retirement, and Long-Term Analysis Division, at a conference organized by the Center for Sustainable Health Spending.

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Health Care Spending Today and in the Future: Impacts on Federal Deficits and Debt

  1. 1. Congressional Budget Office Health Care Spending Today and in the Future: Impacts on Federal Deficits and Debt Presentation to a Conference Organized by the Center for Sustainable Health Spending, Washington, DC July 18, 2017 Jessica Banthin Deputy Assistant Director For more details, see CBO, The 2017 Long-Term Budget Outlook (March 2017), www.cbo.gov/publication/52480
  2. 2. 1CONGRESSIONAL BUDGET OFFICE An Overview of the Long-Term Budget Outlook
  3. 3. 2CONGRESSIONAL BUDGET OFFICE If current laws governing taxes and spending did not change, the condition of the federal budget would worsen considerably over the next three decades.
  4. 4. 3CONGRESSIONAL BUDGET OFFICE Growth in federal spending would continue to outpace growth in federal revenues, leading to ever larger budget deficits.
  5. 5. 4CONGRESSIONAL BUDGET OFFICE Federal Spending and Revenues Percentage of Gross Domestic Product Actual Projected
  6. 6. 5CONGRESSIONAL BUDGET OFFICE As a result, debt would grow larger in relation to the economy than ever recorded in U.S. history.
  7. 7. 6CONGRESSIONAL BUDGET OFFICE Federal Debt Held by the Public Percentage of Gross Domestic Product
  8. 8. 7CONGRESSIONAL BUDGET OFFICE Federal spending is projected to rise notably in relation to the economy because of growth in spending on Social Security, the major health care programs, and interest on the government’s debt.
  9. 9. 8CONGRESSIONAL BUDGET OFFICE Components of Federal Spending Percentage of Gross Domestic Product 0 5 10 15 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 Major Health Care Programs Other Noninterest Spending Social Security Net Interest ProjectedActual
  10. 10. 9CONGRESSIONAL BUDGET OFFICE Health Care Spending Today
  11. 11. 10CONGRESSIONAL BUDGET OFFICE National Spending for Health Care, 2015 1 5 6 Medicare
  12. 12. 11CONGRESSIONAL BUDGET OFFICE CBO defines outlays for the major health care programs as spending for: • Medicare, • Medicaid, • Children’s Health Insurance Program (CHIP), and • Subsidies for health insurance purchased through the marketplaces established under the Affordable Care Act and related spending.
  13. 13. 12CONGRESSIONAL BUDGET OFFICE Net Outlays for Major Health Care Programs in 2017 Medicare 590 Medicaid 385 Health Insurance Subsidies and Related Spending 51 Children's Health Insurance Program 15 ____________ Total 1,041 Billions of Dollars
  14. 14. 13CONGRESSIONAL BUDGET OFFICE Health Care Spending in the Long-Term Budget Outlook
  15. 15. 14CONGRESSIONAL BUDGET OFFICE If current laws generally remain unchanged, CBO projects that federal spending on the major health care programs would grow larger than any other category of spending.
  16. 16. 15CONGRESSIONAL BUDGET OFFICE Spending in the Past and Under CBO’s Extended Baseline Percentage of Gross Domestic Product
  17. 17. 16CONGRESSIONAL BUDGET OFFICE Spending on the major health care programs would account for 40 percent of federal noninterest spending in 2047, compared with 28 percent today.
  18. 18. 17CONGRESSIONAL BUDGET OFFICE Composition of Federal Noninterest Spending Under CBO’s Extended Baseline Percent
  19. 19. 18CONGRESSIONAL BUDGET OFFICE Spending on Medicare is projected to drive much of the growth in spending on major health care programs.
  20. 20. 19CONGRESSIONAL BUDGET OFFICE Federal Spending on the Major Health Care Programs, by Category Percentage of Gross Domestic Product Projected
  21. 21. 20CONGRESSIONAL BUDGET OFFICE Two factors explain the projected growth in spending on major health care programs: aging and rising health care costs per person, or excess cost growth.
  22. 22. 21CONGRESSIONAL BUDGET OFFICE Projected Spending Growth in the Major Health Care Programs Percentage of Gross Domestic Product
  23. 23. 22CONGRESSIONAL BUDGET OFFICE Population, by Age Group Millions of People
  24. 24. 23CONGRESSIONAL BUDGET OFFICE Uncertainty in the Long-Term Projection
  25. 25. 24CONGRESSIONAL BUDGET OFFICE Even if future tax and spending policies matched the policies specified under current law, budgetary outcomes would undoubtedly differ from CBO’s projections because of changes in the economy, demographics, and other factors, such as excess cost growth.
  26. 26. 25CONGRESSIONAL BUDGET OFFICE Federal Debt Given Different Rates of Excess Cost Growth for Federal Spending on Medicare and Medicaid Percentage of Gross Domestic Product 0 50 100 150 200 250 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 206 150 109 Actual Projected Given Rates 1 Percentage Point Higher Extended Baseline, With Excess Cost Growth of 1 Percent in 2047 Given Rates 1 Percentage Point Lower
  27. 27. 26CONGRESSIONAL BUDGET OFFICE This presentation will be available on CBO’s website, www.cbo.gov.

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