Revised CBO Projections Show Increase in Federal Health Spending
According to CBO, spending on Medicare, Medicaid, the Children's Health Insurance Program and the Affordable Care Act's exchange subsidies will increase from 5.2% of the country's gross domestic product this year to 6.2% of GDP over the next decade. That projection is up slightly from CBO's March budget report, which estimated health care expenditures would represent 6.1% of GDP in 2025.
According to CBO, the increase means the federal government will spend $272 billion more on health care between 2016 and 2025. According to Modern Healthcare, the revision stems largely from the Medicare Access and CHIP Reauthorization Act of 2015 (HR 2), which repealed Medicare's sustainable growth rate formula, extended expiring Medicare laws and raised Medicare premiums for higher-income beneficiaries. CBO noted that changes included in HR 2 accounted for $159 billion of the revised total.
In addition, the ACA's subsidies to help U.S. residents purchase exchange coverage are expected to cost the federal government $16 billion less than previously anticipated because more people are expected to use CHIP or Medicaid programs, according to CBO.
Further, CBO estimated that the federal deficit will be $60 billion lower than it had projected in March, partly because of revenue from fees and fines implemented under the ACA (Herman, Modern Healthcare, 8/25).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.