CBO: Healthcare to drive spending increases over next decade

Healthcare expenditures will contribute to an increase in federal spending over the next few years, according to a new report from the Congressional Budget Office (CBO).

After a drop in the federal budget deficit this year and the next, it will begin to rise again after 2017, driven in large part by Medicare spending, according to the report. In 2016, spending for Medicare, Medicaid and other healthcare programs, including health insurance subsidies offered through federal exchanges, will reach 5.3 percent of gross domestic product (GDP), and in the next years it will grow swiftly, reaching 6.2 percent of GDP by 2025.

"Because of the aging of the population, rising healthcare costs, and a significant expansion in eligibility for federal subsidies for health insurance, outlays for Social Security and the federal government's major healthcare programs are projected to rise substantially over the next 10 years," the report states.

In response to the report, the Healthcare Supply Chain Association (HSCA) noted the savings provided by group purchasing organizations (GPOs) could address the rising costs projected by the CBO.

"GPOs are a critical cost containment solution for the U.S. health system, which was one of the primary areas for budgetary concerns highlighted in the CBO's annual 10-year outlook," HCSA President Curtis Rooney said in a statement emailed to reporters. "Hospitals and healthcare providers continue to face mounting financial pressure to cut costs, and will turn to their GPO partners to find savings and deliver the best products at the best value."

A recent report from the Altarum Institute found healthcare spending has picked up, driven partly by provisions of the Affordable Care Act. Spending has increased 2.6 percent annually since late 2007, and grew at a 5 percent rate for the first 11 months of 2014 after staying flat at 3.6 percent for the entirety of 2013, FierceHealthFinance previously reported.

To learn more:
- read the report (.pdf)