Health Care Spending Is Driving Future Deficits
Without Reform, CBO Projects Medicare and Medicaid Spending Will Grow Rapidly
SOURCE: AP/Thomas Kienzle
Download this memo (pdf)
Health care is going to be the biggest driver of federal spending increases after interest payments on the national debt. The Congressional Budget Office projects that in 2019 outlays for Medicare and Medicaid—the two largest health care programs—will be almost two full percentage points of GDP higher than they were in 2008, even after accounting for the initial cost savings included in the president’s original budget plan.
In contrast, CBO projects that all defense and non-defense discretionary spending—the spending that Congress has to appropriate each year—will actually decline by about one percentage point of GDP. By 2019, federal spending on Medicare and Medicaid will exceed the entire defense budget. Health care spending will be higher than total spending on all domestic discretionary programs and it will even surpass spending on Social Security.
The only area of federal spending that will rise more than health care is interest payments on the national debt. Of course, the size of future interest payments is in large part a product of the size of future deficits. And since those deficits are driven mostly by health care spending— spending in all other areas besides health care and Social Security will actually decline over the next ten years—a good portion of the rise in interest payments is also attributable to increased health spending.
This trend has been decades in the making. Budget analysts and health care experts have long identified soaring health care spending as a primary factor in producing future deficits. It is not a new revelation that we face such a bleak fiscal future, and that the problem is driven largely by rising health care costs. What’s new is that policymakers are no longer sweeping the problem under the rug with budget gimmicks designed to hide the true fiscal challenge that we face.
For more information on the deficit, see:
To speak with our experts on this topic, please contact:
Print: Liz Bartolomeo (poverty, health care)
202.481.8151 or firstname.lastname@example.org
Print: Tom Caiazza (foreign policy, energy and environment, LGBT issues, gun-violence prevention)
202.481.7141 or email@example.com
Print: Allison Preiss (economy, education)
202.478.6331 or firstname.lastname@example.org
Print: Tanya Arditi (immigration, Progress 2050, race issues, demographics, criminal justice, Legal Progress)
202.741.6258 or email@example.com
Print: Chelsea Kiene (women's issues, TalkPoverty.org, faith)
202.478.5328 or firstname.lastname@example.org
Print: Benton Strong (Center for American Progress Action Fund)
202.481.8142 or email@example.com
Spanish-language and ethnic media: Jennifer Molina
202.796.9706 or firstname.lastname@example.org
TV: Rachel Rosen
202.483.2675 or email@example.com
Radio: Sally Tucker
202.481.8103 or firstname.lastname@example.org