Medicare/Medicaid spending a national 'threat,' says CBO

The Congressional Budget Office (CBO) cites federal healthcare spending as "the single greatest threat" to the United States' budget stability in its new report, The Budget and Economic Outlook: Fiscal Years 2010 to 2020. Under current law, Medicare spending will reach $1,038 billion in 2020, with Medicaid spending coming in at $458 billion.

In 2009, higher unemployment drove up Medicaid spending by 9 percent ($18 billion). For the previous 10 years, the program's average annual growth rate had held at 7 percent. Medicare outlays also rose faster than average, jumping by 10 percent ($39 billion).

Medicare and Medicaid spending, exclusive of stimulus spending, should continue to grow at a combined average rate of about 7 percent a year between 2011 and 2020. Health spending is being propelled by higher numbers of Medicare and Medicaid beneficiaries, as well as an increase in per-beneficiary spending that outpaces growth in the per-capital gross domestic product.

Combined outlays for Medicare and Medicaid currently equal about 5.5 percent of GDP. "Under current law, spending for those two programs is expected to keep growing faster than the economy, reaching 6.6 percent of GDP by 2020 and potentially reaching 10 percent by 2035," says the CBO.

To learn more about the CBO projections:
- read the CBO report [1]