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CBO Report Examines Federal Healthcare Spending

1 min read

CBOThe government’s healthcare spending has slowed in past years but is still predicted to overtake the country’s economic output, a new Congressional Budget Office report says.

According to the nonpartisan analyst’s “2013 Long-Term Budget Outlook,” federal spending on Medicare is forecast to account for 4.9 percent of gross domestic product in 2038, up from 3 percent in 2013.

Spending on Medicaid, the Children’s Health Insurance Program and health exchange subsidies from 2014 will constitute 3.2 percent of GDP in 25 years, up from 1.7 percent for 2013.

Julie Topoleski, an analyst at CBO’s health, retirement and long-term analysis division, writes rising personal income, and the emergence of new medical technologies and comprehensive health insurance coverage have influenced spending growth since 1985.

Changes to Medicare payment policies, the entry of health management organizations and an economic slowdown helped slightly temper disbursements, she added.

She expects growth to eventually level out as consumers recalibrate their budgets to account for other goods and services while companies and insurers adjust coverage, benefits and their own health care budgets.

“Those reactions to cost pressures will increase the incentives for health care providers to invest in cost-reducing technologies and to increase efficiency,” Topoleski writes.

“Thus, even in the absence of changes in federal law, growth in per capita spending on Medicaid and on health care financed through the private sector will gradually slow.”

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