CBO Lowers Cost Projections for Medicare, Medicaid
Medicare and Medicaid will cost a combined $89 billion less over 10 years than the Congressional Budget Office previously projected, according to new CBO estimates released Wednesday, Kaiser Health News' "Capsules" reports.
In an update to CBO's April forecast, Medicare is expected spend $49 billion less from 2015 to 2024, while Medicaid spending is expected to be $40 billion less over the same time period.
The reductions come from reduced spending on medical services and labor costs (Agnes Carey, "Capsules," Kaiser Health News, 8/27). Specifically, technical changes, such as how providers and patients behave when it comes to care and how much care beneficiaries are using, has helped to reduce costs. Cost-cutting measures under the Affordable Care Act and the 2011 Budget Control Act also have helped curb health care spending (Sanger-Katz/Quealy, "The Upshot," New York Times, 8/27).
Major Health Spending To Increase This Year
While spending on Medicaid and Medicare will drop over the next 10 years, spending on major health care programs as a whole is expected to increase this year by about 9%, or $67 billion, according to CBO. The agency noted that:
- Medicaid accounts for the largest increase this year, growing by about 15%, or $40 billion;
- Federal subsidies to help consumer who enrolled in health plans through the ACA's health insurance exchanges will cost about $17 billion this year; and
- Medicare costs will likely increase by around $12 billion this year.
CBO said that Medicaid expansion and premium subsidies under the ACA comprise a majority of the short-term increase ("Capsules," Kaiser Health News, 8/27).
According to "The Upshot," the reductions mean that the federal government's long-term budget deficit will be much less than projected a few years ago. While a deficit is still likely in future decades, the shortfall should be easier to handle than observers had assumed ("The Upshot," New York Times, 8/27). Specifically, the difference between revenue the government takes in and spending will now be more than $400 billion less through 2024 than CBO projected in April (Paletta, Wall Street Journal, 8/27).
In addition, the lower costs reflect larger trends that are taking place in the overall health care system. According to the "The Upshot," lower care costs of care combined with more U.S. residents gaining health insurance could point to stabilization in the nation's health care spending.
However, experts have noted that slowdowns in health care spending could reverse as the economy improves ("The Upshot," New York Times, 8/27).
CBO Estimates on SGR Fix Less Than 2012
Meanwhile, CBO said that a permanent repeal of Medicare's sustainable growth rate would cost about $131 billion over 10 years, far lower than the $316 billion CBO projected it would cost in 2012 ("Capsules," Kaiser Health News, 8/27).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.