Print“Policymakers will have to substantially restrain the growth of spending for those programs, raise revenues above their historical share of GDP, or pursue some combination of those two approaches.”
Despite an anticipated drop in Medicaid spending in 2012, the United States government is expected to see spending on health programs more than double between 2012 and 2022, according a report from the Congressional Budget Office.
The CBO’s Budget and Economic Outlook for 2012 to 2022 forecasts that healthcare spending will grow at an average rate of nearly 8 percent per year, reaching $1.8 trillion in 2022. By then, that spending is expected to represent 7.3 percent of the nation’s GDP, up about 2 percentage points from today’s level.
Healthcare spending in 2011 on mandatory programs including Medicare, Medicaid, and other federal programs reached $856 billion, accounting for just under 40 percent of all mandatory spending. In 2012, spending is actually expected to fall to $847 billion, or about 5.5 percent of GDP, thanks to a decline in Medicaid spending as a result of changes that shift a greater share of the costs of the program to states.
Medicaid is a joint federal and state program that funds medical care for certain poor, elderly, and disabled people. Under the American Recovery and Reinvestment Act and subsequent legislation, the federal government temporarily took responsibility for a greater share of the program. Temporary increases put the federal share at an average of 68 percent in 2010, up from a typical rate of 57 percent, where it will be in 2012.
Nevertheless, as certain provisions of the Affordable Care Act take effect, federal spending on the Medicaid program is expected to climb to $605 billion by 2022, more than twice the amount expected to be spent in 2012.
The total gross Medicare outlay in 2022 is expected to exceed $1.0 trillion, nearly 90 percent more than its anticipated 2012 level. The largest driver of the growth in the cost of Medicare, which provides subsidized insurance for the elderly and some people with disabilities, is the increase in the number of beneficiaries. CBO says Medicare will see the number of beneficiaries rise to 66 million by 2022, up from 48 million today.
The CBO also points to certain provisions of the Affordable Care Act that will drive government spending on healthcare higher. These include payments to health insurance plans for risk adjustment and reinsurance.
In Congressional testimony following the release of the report, CBO Director Douglas Elmendorf said that if that rising level of spending is coupled with revenues that are held close to the average share of GDP that they have represented for the past 40 years, “the resulting deficits will increase federal debt to unsupportable levels.”
“To prevent that outcome, policymakers will have to substantially restrain the growth of spending for those programs, raise revenues above their historical share of GDP, or pursue some combination of those two approaches,” he says.
February 03, 2012
http://www.burrillreport.com/article-federal_spending_on_healthcare_to_double_by_2022.html
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