Congressional Budget Office Presentation to the Council for Affordable Health Coverage and the American Action Forum November 1, 2017 Keith Hall Director For more details, see Congressional Budget Office, The 2017 Long-Term Budget Outlook (March 2017), www.cbo.gov/publication/52480 . Factors Underlying CBO’s Long-Term Outlook for Federal Health Care Spending
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Factors Underlying CBO’s Long-Term Outlook for Federal Health Care Spending
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Congressional Budget Office
Presentation to the Council for Affordable Health Coverage and the American Action Forum
November 1, 2017
Keith Hall
DirectorFor more details, see Congressional Budget Office, The 2017 Long-Term Budget Outlook (March 2017), www.cbo.gov/publication/52480.
Factors Underlying CBO’s Long-Term Outlook for Federal Health Care Spending
CBO defines outlays for the major health care programs as spending for:
Medicare,
Medicaid,
The Children’s Health Insurance Program (CHIP), and
Subsidies for health insurance purchased through the marketplaces established under the Affordable Care Act and related spending.
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Net Outlays for Major Health Care Programs in 2017
Medicare 590
Medicaid 385
Health Insurance Subsidies and Related Spending 51
Children's Health Insurance Program 15
_____________
Total 1,041
Billions of Dollars
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Health Care Spending in the Long Term
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If current laws generally remained unchanged, CBO projects that federal spending on the major health care programs would grow larger than any other category of spending.
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Spending in the Past and Under CBO’s Extended Baseline
Percentage of Gross Domestic Product
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Spending on the major health care programs would account for 40 percent of federal noninterest spending in 2047, compared with 28 percent today.
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Composition of Federal Noninterest Spending Under CBO’s Extended Baseline
Percent
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Two factors explain the projected growth in spending on major health care programs: aging and rising health care costs per person (also known as excess cost growth).
Estimated and Projected Rates of Excess Cost Growth in Spending for Health Care
Percent
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Population, by Age GroupMillions of People
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Projected Spending Growth in the Major Health Care Programs
Percentage of Gross Domestic Product
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An Overview of the Long-Term Budget Outlook
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If current laws governing taxes and spending did not change, the condition of the federal budget would worsen considerably over the next three decades.
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Federal Spending and Revenues
Percentage of Gross Domestic Product
Actual Projected
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As a result, debt would grow larger in relation to the economy than ever recorded in U.S. history.
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Federal Debt Held by the Public
Percentage of Gross Domestic Product
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Uncertainty in the Long-Term Projections
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Excess cost growth is a significant driver of future debt and an important source of uncertainty in CBO’s projections.
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Excess Cost Growth Rates for Federal Spending on Medicare and Medicaid (30-Year Average)
0
1
2
3
2005 2010 2015 2020 2025 2030 2035 2040 2045
Last Year of the 30-Year Average
Actual Projected
1.1 (Extended Baseline)
0.1 (Lower Rate)
2.1 (Higher Rate)
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Federal Debt Given Different Rates of Excess Cost Growth for Federal Spending on Medicare and Medicaid
Percentage of Gross Domestic Product
0
50
100
150
200
250
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045
206
150
109
Actual Projected Given Rates 1 Percentage Point Higher
Extended Baseline, With Excess Cost Growth of 1 Percent in 2047
Given Rates 1 Percentage Point Lower
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This presentation will be available on CBO’s website, www.cbo.gov.