Health Care Spending Will Gobble the Federal Budget, Warns CBO


In a brief, slideshow analysis of federal health care policy, the Congressional Budget Office warns that "federal spending for health care programs is growing much faster than other federal spending and the economy as a whole." That's partially because of the Affordable Care Act, though the CBO points out that, even after Obamacare is fully implemented, Medicare will continue to have the largest appetite for federal dollars intended to support health care (intentions and results aren't the same thing, of course.) The CBO contemplates a few cost-cutting tactics, few of which are likely to win fans, and some of which might simply torpedo the provision of health care.

Health care expenditures

Ever-growing expenditures without revenues or even an economy to match are a bit of a problem, as the CBO has attempted to explain in the past, using words such as "unsustainable."

Medicare spending growth
Mercatus Center

Despite all of the attention paid to Obamacare's economic idiocy, technical failures, and general incompetence as a piece of policy, it doesn't represent a big portion of the federal government's projected spending spree on health care issues. Most of that money will go to the elderly, with Medicare expected to consume $894 billion in 2023, compared to $560 billion for Medicaid and CHIP, and $135 billion for Exchange subsidies and related items.

Using CBO numbers in 2009, the Mercatus Center's Veronique de Rugy prepared the graph above, which shows Medicare spending turning into the monster that eats…everything over the next few decades. Note that projections of Medicare spending keep rising, and rather quickly.

Since all of this looks to get spendy—well, spendier—really fast, the CBO contemplates a few approaches for trimming the price tag which "might (or might not) help the federal budget." Among those are taxing, bribing, and nagging people into healthier behavior, capping federal Medicaid payments (an approach that would kneecap the current push to expand Medicaid rolls), and paying less to medical providers.

It's a good thing crappy compensation from government programs isn't already an issue for physicians. Oh…wait.

Oh, yes. Look for the federal government's forays into health policy to be an ever-more expensive problem in years to come.

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  1. Would you please hold the goddamn spending, now!

    1. Forget holding, cut it.

      1. I was in Bill Murray mode, channeling his character from Scrooged.

  2. If you like your federal budget you can keep it. Period.

  3. If we could get Washington and the various state capitals to take their foot off of the economy’s throat, spending 15% of our GDP on Social Security and Healthcare for old and poor people might not hurt so much.

    1. Yes. Stop throttling the Golden Goose, and maybe we could afford to waste trillions of dollars. Not ideal, since I’d rather we didn’t do all of this stupid and immoral shit in the first place, but beats where we are now.

    2. If we managed that, you can presume the politicos would increase spending to match and then some.

  4. Wait- I thought we fixed that.

    AFFORDABLE Care Act: it’s right there in the name.

    Problem solved!

  5. Once again, this raises the question: why is the administration and its (diminishing) fanbase celebrating moving millions more onto Medicaid?

    1. I have been told it’s because Medicaid/Medicare is a proven winner at providing quality healthcare at a low cost and that we should all be in the system.

      It doesn’t seem to make any difference to them when I point out that anybody getting a paycheck is in fact ‘in’ the system – just that more people are in the system as payers than payees – and that ‘have other people pay for your healthcare’ simply isn’t a mathematically viable healthcare plan for the entire nation.

  6. I need to find a new eye doctor. If I randomly call five or six offices and ask for price quote prior to going in, what are the chances I will a real, reliable estimate?

    We could start there.

    1. The Sunday papers here usually have at least five or six optical places offering special prices on eyeglasses.

      The lowest one last week was $99 for two pairs of single vision or standard bi-focals, including an exam by an optometrist.

      But then optical stuff was traditionally not included in insurance.

      1. The question is why the optical stuff is exceptional in insurance?

  7. Unpossible. I have it on the authority of both Tony and shreeeeek that the ACA has already bent the cost curve and health care spending is plummeting.

    1. Since the health care market, like the stock market, is forward looking, it’s apparent why cost increases started to decline even before the law was passed.

  8. “But then optical stuff was traditionally not included in insurance.”

    …and thus more like one of those free market thingies. “Markets. How do they work?”

  9. Playing the devil’s advocate a little here but how many likely recipients are gonna die off before 2038?

    1. Not anywhere near as many as will be added unless we have some sort of plague or other disaster.

      That was the whole problem with the Baby Boom, there were so many kids born in such a short time relative to the size of the prior or following generations. Then you had to combine it with growing life expectancies such that the Boomers will be the first generation where those who make it to age 65 will have an average life expectancy of well past 90 meaning that the average boomer will collect SS/Medicare for more than 30 years

    2. We cann’t count them :sigh

  10. Logan’s Run would resolve a lot of this.

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