CBO: Federal health spending to double over the next decade

Feb 2 2012

In its budget and economic outlook, the Congressional Budget Office projects an 8 percent annual increase in health spending between 2012 and 2022, mainly because of an aging U.S. population and rising treatment costs. The analysis includes a bigger pricetag for a permanent fix to the Medicare physician payment formula.

Reuters: Government Health Spending Seen Hitting $1.8 Trillion
Government spending for Medicare, Medicaid and other healthcare programs will more than double over the next decade to $1.8 trillion, or 7.3 percent of the country's total economic output, congressional researchers said on Tuesday. In its annual budget and economic outlook, the non-partisan Congressional Budget Office said that even under its most conservative projections, healthcare spending would rise by 8 percent a year from 2012 to 2022, mainly as a result of an aging U.S. population and rising treatment costs. It will continue to be a key driver of the U.S. budget deficit (Morgan, 1/31).

Modern Healthcare: Federal Health Outlays Expected To Double Over Next Decade
Federal healthcare spending is projected to more than double in the coming decade, according to federal budget projections. Total federal healthcare spending on so-called mandatory programs-;including on Medicare and Medicaid-;will grow from $847 billion in the current fiscal year to $1.8 trillion in fiscal 2022, according to the Congressional Budget Office (Daly, 1/31).

National Journal: 'Doc Fix' Just Got More Expensive
Permanent repeal of the flawed Medicare payment formula known as the sustainable growth rate just got a lot more expensive. According to the Congressional Budget Office, ... a 10-year repeal of the growth-rate formula that froze doctors' rates at current levels would cost $316 billion, compared with $290 billion when CBO last calculated the rate in November. The difference may make permanent repeal of the formula--always a long shot--even less palatable to lawmakers. But even with the doc fix on hold, the report projects that spending on health care programs will explode in the coming decade (Sanger-Katz, McCarthy, 1/31).

Medscape: 'Doc Fix' Easily Covered By War Savings, Says CBO
Politicians looking to solve the Medicare reimbursement crisis heard some impressive numbers yesterday from the Congressional Budget Office (CBO). The news? There is more than enough in projected war savings to pay for a repeal of the sustainable growth rate (SGR) formula, used to set Medicare rates for physicians, according to a budget and economic outlook published online January 31 by the CBO. … However, lawmakers so far have been unable to swallow the cost of a long-term "doc fix" of the SGR problem. The CBO puts the cost of merely freezing Medicare rates at their current level through 2022 at $316 billion (Lowes, 1/31).

News outlets also reported on the CBO report's big-picture theme: that the deficit, even as it tops $1 trillion, is falling -

The New York Times: Budget Deficit Tops $1 Trillion, But Is Falling, Report Says
Lawmakers of both parties say Congress must block impending cuts in Medicare payments to doctors, who face a 27 percent reduction in fees in March. Just to maintain Medicare payment rates at current levels, without an increase, would cost $372 billion over 10 years, compared with spending expected under current law, the budget office said (Pear, 1/31).

Los Angeles Times: Current Laws Would Slash Federal Deficit, Analysts Say
By the middle of the decade, deficits would begin to curve upward again, largely as a result of an aging population and the related costs of Medicare and Social Security. Resolving that issue is what Elmendorf called the "fundamental challenge." The GOP has proposed offering the next generation of seniors a fixed-price stipend to buy private health insurance -; a proposal from Rep. Paul D. Ryan (R-Wis.) that was panned by much of the public and used as a Democratic campaign issue against Republicans who supported it (Mascaro, 1/31).

The Washington Post: U.S. Deficit To Top $1 Trillion, Smallest Since '09
The federal deficit will approach $1.1 trillion this year, congressional budget analysts said Tuesday, down substantially from the worst days of the Great Recession (Montgomery, 1/31).

The Associated Press/Washington Post: Congressional Budget Office Estimates Federal Budget Deficit To Dip Slightly to $1.1T
The report is yet another reminder of the perilous fiscal situation the government is in, but it's commonly assumed that President Barack Obama and lawmakers in Congress will be able to accomplish little on the deficit issue during an election year. … The recent wave of shocking, trillion-dollar-plus deficits has been largely a product of the recent deep recession and the slower-than-hoped recovery. The jolt to the economy has made a permanent dent in revenue estimates but the budget crunch will get even worse with the retirement of the Baby Boom generation and the resulting strain of Social Security and Medicare (1/31).

The Wall Street Journal: Deficit Is Again Set To Top $1 Trillion
Mr. Elmendorf warned that the primary driver of the deficit later this decade would be the cost of an aging U.S. population, particularly the rising costs of government health-care programs. For example, the CBO projected the government would spend $1.6 trillion on Social Security, Medicare, and Medicaid in 2012, 44% of the federal budget. In 2022, the government will spend $3.0 trillion on those programs, 54% of the federal budget (Paletta, 2/1).

And in other economic news -

Bloomberg: Jobs Increase As Health Care Eclipses Factories
The aging of America may be good for the U.S. labor market. A growing number of older people and rising health-care spending are driving demand for workers from nursing aides to surgeons. While the economy lost 7.5 million positions during the recession, health care expanded staff. Together with social assistance, it will add 4 million employees to become the second-biggest job gainer by 2018, behind only professional and business-services, according to the Bureau of Labor Statistics (Chandra and Kolet, 1/31).