Costs of Health Care Programs and Social Security Poised to Bust the Country

Peter Suderman reported the other day that the federal government's unsustainable spending spree continues apace, with debt expected to continue stacking up, "to a percentage of GDP seen only once before in U.S. history (just after World War II)," in the words of the Congressional Budget Office. The health care component of those expenses is getting the most attention, he noted.

Why is the health care component so talked about? Because health care and Social Security are projected to double in cost as a share of GDP. Let's quote the CBO again:

Federal spending for Social Security and the government’s major health care programs—Medicare, Medicaid, the Children’s Health Insurance Program, and subsidies for health insurance purchased through the exchanges created under the Affordable Care Act—would rise sharply, to a total of 14 percent of GDP by 2039, twice the 7 percent average seen over the past 40 years. That boost in spending is expected to occur because of the aging of the population, growth in per capita spending on health care, and an expansion of federal health care programs.

Interest payments will also more than double, from 2 percent of GDP to 4.5 percent. By contrast, "total spending on everything other than Social Security, the major health care programs, and net interest payments would decline to 7 percent of GDP by 2039—well below the 11 percent average of the past 40 years."

SpendingCBO

Which is to say that spending on Social Security, Medicare, and other health programs is expanding at a rate that the federal government can't begin to afford. Servicing the resulting debt is also becoming increasingly spendy.

Getting the federal government to live within its means doesn't involve trimming a little fat. It's going to require strictly reining-in and reducing its role.

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • BiMonSciFiCon||

    Vox told me this is a good thing. Except when it's not. Then we need Obamacare. Except when Obamacare raises spending. Then it's a good thing.

    It makes sense if you are one of The Brightest Minds, the Greatest Thinkers over at Vox.

  • Sevo||

    Yep, craig was here yesterday explaining how increased insurance company profits show that O-care is a success!
    Why, before O-care, those evil insurance companies were making profits, but now, those wonderful public spirited organizations are just making profits!
    Pretty sure craig is dizzy all the time, but if not, that spinning sure would do it.

  • XM||

    Increased profit resulting from freakishly high premiums and customers having forced to upgrade to more expensive plans. And people were actually forced to buy insurance.

    Insurance companies can also cut down on cost by limiting your choices of doctors and hospitals. But these are tales of success in the ACA world.

  • creech||

    Sure we can afford it if the mean Teathuglican kochsuckers would just get out of the way! SS, Medicare, rebuilding infrastructure knocked down by careless contractors, letting teeming masses into the country and providing cradle to grave succor, building democracy around the world while tripling our military strength, free condoms and health care for all, turning local LEOs into the 3rd Armored Division, and ten thousand other unfulfilled needs is all within our grasp if only
    the right Top. Men. are in charge.

  • ||

    There isn't going to be any trimming, any reducing, any cutting. The craven political class is going to ride the gravy train until it runs off the rails, and it will run off the rails.

  • Lord Humungus||

    whee!

  • Cytotoxic||

    Once interest rates tick up, it will be slashed. Happened in Canada, it'll happen in America-once you lose reserve currency status.

  • Dances-with-Trolls||

    Getting the federal government to live within its means doesn't involve trimming a little fat. It's going to require strictly reining-in and reducing its role.

    For which there will be political and public will sometime after a catastrophic or near-catastrophic financial collapse. It's just not going to happen without it. It will stop when the government is unable to borrow, beg, or steal it's way out and the citizens get stuck with the horrific results of the fiscal behavior that lead it to that point. When we are all Detroit maybe people will be willing to imagine a different way. A little bit after it is a little to late. The way it usually works with people.

  • Lady Bertrum||

    My advice is to stock up now on your oxycontin, metformin, amoxicillian, and zoloft because when you need it it won't be available.

  • ||

    Hoarder!

  • Jordan||

    Hodor!

  • Sudden||

    Holodomor

  • Lady Bertrum||

    We can never have too much oxy on hand.

  • ||

    I see you studied at the Limbaugh school of pharmacology.

  • Lady Bertrum||

    It is one of the five food groups.

  • Scruffy Nerfherder||

    Who needs Zoloft when you've got moonshine?

  • Plàya Manhattan.||

    I don't have moonshine. Do you participate in the "Sharing Economy"?

  • sarcasmic||

    Or weed.

  • Plàya Manhattan.||

    Amoxicillin is worthless now. Augmentin or GTFO.

  • Plàya Manhattan.||

    Also, no stimulants in your medicine cabinet?

    You're doing it wrong.

  • Lady Bertrum||

    no stimulants in your medicine cabinet?

    I'm open to suggestions.

    I haven't used an anti-biotic since my sons were toddlers and had ear infections.

  • Plàya Manhattan.||

    You can get ProVigil without a written script (Schedule IV, I believe); a doctor can phone it in. Increased wakefulness, enhanced cognitive function, and improved working memory.

    Adderall is Schedule II, and requires a written script, no refills allowed. My taxes wouldn't get done without it.

  • Lady Bertrum||

    Sounds like a necessary addition to my list.

  • Sudden||

    One needs both depressants and stimulants.

    I generally think the cure for the blues is Italian reds and Colombian whites.

  • Lady Bertrum||

    My actual drug of choice is wine - boxed wine. I'm not fancy.

  • Plàya Manhattan.||

    If you take the aluminum bladder out of the box, it can fit into a backpack quite nicely. Perfect for beach days.

  • Sudden||

    Were the Piedmont Nebbiolo varietals cheaper, wine would be my drug of choice. I had a 2007 Barbaresco two weeks ago that was the best glass (and bottle) of wine I'd ever had.

    But sadly, those things run above my budget (that one was a wedding gift I was supposed to save for my five year anniversary, and upon rediscovery in my wine fridge, seemed like it should be drank post haste).

    Nay, when the economocalpyse strikes, I'll move to Oregon and pursue my life long goal of becoming a hops farmer.

  • Ivan Pike||

    metformin

    ??? - diabetes meds?

  • Plàya Manhattan.||

    It'll be like currency when the economy collapses.

  • Ivan Pike||

    It'll be like currency when the economy collapses.

    What is it used for other than diabetes? Seems strange to me, but then I had to look up the drugs to see what they were anyway.

  • ||

    Nada. There are just a lot of diabetics. BP meds will also be needed. Red yeast rice extract is a serviceable mix of statins to treat cholesterol. I believe its nearly identical to atorvastatin or lovastatin (can't recall which though).

  • Plàya Manhattan.||

    People will pay anything for a drug they need to stay alive. I'm thinking maybe this should be part of my investment portfolio.

  • Lady Bertrum||

    By 2020 110% of the American population will be diabetic, so preparation and stuff.

    I'm not. I don't eat sugar. I aspire to be sugarfree.

  • Plàya Manhattan.||

    It's easy to be Sugarfree. Just accidentally get shot in the pancreas.

  • Lady Bertrum||

    If I get shot will I then be able to produce novellas that include entirely too much Doom and too much Cock?

  • ||

    too much Cock

    I understand each of these words, but arranged thusly they make no sense.

  • Lady Bertrum||

    So, just like oxycontin?

  • ||

    Exactly, Lady B, exactly...

  • DFG||

    "Getting the federal government to live within its means doesn't involve trimming a little fat. It's going to require strictly reining-in and reducing its role."

    The meeting for all those who believe this will actually happen is scheduled for the phone booth at the end of the hall.

  • Knarf Yenrab!||

    That's not going to happen. The politician's master plan of staying in office as long as possible precludes any cuts to special interests, which means that when the can refuses to budge another inch, he's going to be the first one shouting about greed and deregulation.

    Interest payments will also more than double, from 2 percent of GDP to 4.5 percent.

    Interesting. Did the CBO check its magic 8-ball for the interest rates of the future?

  • PapayaSF||

    They have nowhere to go but up.

  • Sudden||

    We apparently had the same thought.

    As I stated after your comment, I'd bet dollars to donuts that this analysis assumes current rates with only gradual increases never reaching historical averages and assumes a far more robust economic growth (and resultant revenue and ergo lower debt levels) than can reasonably be expected given the increasing share of the economy that is the fedgov.

  • Knarf Yenrab!||

    And since interest rates have been the ad hoc-est of ad hoc since Greenspan ran the show, I have to imagine that the CBO economists know that this is the wildest of wild guesses for the same reasons that using statistical projections to predict the winner of the 2017 World Series would be absurdly overreaching.

  • Sudden||

    Not to mention that I think the debt service portion of that graph is assuming a) interest rates remaining where they are well below historical norms and b) far more robust economic growth (they generally assume 3% annual growth) than can reasonably be expected given the federal leviathan leeching ever more capital from the productive sector.

  • Horatio||

    Umm, I thought we established that this isn't a problem RIGHT NOW, so why the scare-mongering?

  • Rasilio||

    Because did you notice the time scale on that graph?

    2039 is just 23 years from now by which point health care, social security, and interest will consume 20% of GDP even though the government has never been able to reliable collect more than 19% in taxes which means annual deficits never again running below 8% of GDP and debt reaching somewhere around 400% of GDP by 2045.

    The really scary part is that is an impossibly rosy scenario which posits no net increases in spending on any other program, that interest rates stay at near or below 0%, and the economy grows smoothly at greater than 3% a year. Realistically we are looking at a total collapse of the dollar no later than 2025 and that collapse becoming inevitable by 2018 (assuming it is not already unavoidable which it may be because it is pretty clear we are nearing the top of yet another inflationary bubble and will see another severe recession within the next 24 months at most).

  • Sudden||

    Could not have said it any better myself.

    My currency collapse prediction was always the mid 2020's.

  • PapayaSF||

    Progressives tell me that all of this can easily be fixed by cutting the military and raising taxes on the rich. And if that doesn't work, cut the military and raise taxes on the rich.

  • Knarf Yenrab!||

    The bad news: if you have a job, you're rich.

  • ant1sthenes||

    Sounds like the next tax avoidance strategy for the rich is "use your wealth to hire unemployed vets and equip them with surplus weaponry sold off by the government to support the welfare state, then conquer the US"

  • Doghouse Reilly||

    Don't expect this to change if everyone's favorite Fauxcahontas gets elected:

    Elizabeth Warren's "11 Commandments of Progressivism"

    Fuck it, if TEAM RED doesn't field a suitable liberty-minded candidate, I'll vote for Warren in the hopes that it sends the country over the cliff faster. Might as well take the poison all at once.

  • Sudden||

    I seriously think we're gonna get a Rand v. Warren matchup, so you'll be able to vote for someone other than Warren.

    Sadly, Warren will win.

  • Cytotoxic||

    No and no.

  • Plàya Manhattan.||

    You have some, uh, perverse incentives.

  • ||

    It occurs to me the bet is win-win for him too. If he loses the bet we live in a universe where Warren didn't get the nom. I count that a pretty big benefit.

  • Sudden||

    Sadly, I fully expect to win that $20 from you.

    And by the end of her second term (because not only will she win the election, she'll get re-elected), there is a good chance that $20 will be worth less than $0.02.

  • Sudden||

    $20 IS NOT PERVERSE!

  • ||

    That's not what you said at lunch last week. While stone cold sober.

  • Sudden||

    I believe I said I look forward to collecting my twenty dollars (implication being I'll win the bet) and my penetrative sodomy (implication being that is the figurative, figurative, consequence of a Warren presidency.

    When she wins, I'm gonna say fuck it and go on the dole.

  • ||

    You can't see it, but I'm making my skeptical face.

  • ||

    No. You are wrong. Even Slate thinks she can't get the nom against Hillary, but should run to force Hillary to the left.

    Because that would make America more wonderful.

    There is zero chance of a President Warren.

  • Sudden||

    I'm sure there were plenty who said in 2006 that there is zero chance of a President Obama.

    And here we are.

    Jesse, the one thing you must learn in this world is to never underestimate the stupidity of your fellow man.

  • ||

    I'm sure there were plenty who said in 2006 that there is zero chance of a President Obama.

    This is possibly true, but I know enough people who like her but don't want her in power that I hope it's not going to repeat itself.

  • Sudden||

    I really hope you're right. Elizabeth Warren might be the worst possible thing that could happen to this country. Her election would essentially etch the transition to Weimerica into stone.

    Hell, I hope Hillary gets the nomination because she may be the only Dem I actually don't see winning the election vs. a GOP candidate.

  • Doghouse Reilly||

    ... never underestimate the stupidity of your fellow man.

    Which is why I'm worried. Subsidize student loans to capture the Millenial vote, prop up SS/Medicare/Medicaid to capture the Boomer vote, and promise free money to everyone in between.

    How do you run and win on a principled stand for liberty when you're up against against "free stuff for everyone!"?

  • Knarf Yenrab!||

    How do you run and win on a principled stand for liberty when you're up against against "free stuff for everyone!"?

    You don't. The lesson conservatives, libertarians, and socialists should all learn from Obama is that you lie your ass off, then do what you want once you get elected, all the while lying your ass off every time a journalist is within 100 yards.

  • ant1sthenes||

    That only works if journalists want to play along.

  • Knarf Yenrab!||

    Recalling her 2012 convention speech, Warren is undoubtedly a passionate and engaging populist.

    She also has the unmistakable air of crazy about her, honest to god pound-shoe-on-desk crazy. The tv era has given us a steady stream of smooth talkers, and Warren isn't that. Biden has a better chance, and that's saying something.

  • Knarf Yenrab!||

    (smooth talker isn't the best description of W, but most all of the presidents since Nixon have been the neighborly sort of personality)

  • Tony||

    You don't care about debt or you'd advocate hiking taxes. The end.

  • The Heresiarch||

    Ooh! Ooh! I can play this game. "You don't care about debt or you'd advocate cutting spending. The end." What prize do I win?

  • The Last American Hero||

    Sorry pal, but look at tax revenues as a percent of GDP since WWII. You don't get more than 18 percent or so. That time frame covers booms, busts, wars, peacetime, HIGH TAX RATES and low tax rates. Raising the rates has the effect of doing jack for increasing tax collections.

    And since Fedgov spends a buck forty for every dollar they collect, how does this help?

  • ant1sthenes||

    If we hiked taxes, they would just increase spending and blow it all on stupid shit, so we'd be sacrificing economic growth (since the taxes would probably hit capital instead of consumption) for basically nothing.

  • concerned cynic||

    Somebody is going to pay more taxes, and I predict that the Medicare tax is going to be increased from 2.9% to 4% for everyone.
    The Federal govt. will eventually own and operate a chain of hospitals offering "free" but ugly healthcare. This is what Medicare and Medicaid and Federally subsidised health insurance will pay for. Better health will be available, but will require fully private insurance or paying out of pocket.

GET REASON MAGAZINE

Get Reason's print or digital edition before it’s posted online

  • Video Game Nation: How gaming is making America freer – and more fun.
  • Matt Welch: How the left turned against free speech.
  • Nothing Left to Cut? Congress can’t live within their means.
  • And much more.

SUBSCRIBE

advertisement