Although overall federal spending on health care is expected to soar in coming decades, cost-control measures in the Patient Protection and Affordable Care Act will help reduce the rate of growth, according to a report from the Congressional Budget Office.
Total spending on Medicare, Medicaid, the Children’s Health Insurance Program and PPACA insurance subsidies is expected to rise because of a growing elderly population, more people gaining insurance coverage and the cost of new medical technologies. However, federal health-care spending is expected to be equal to 8 percent of GDP by 2039, down from a projection last year of 8.1 percent. The savings would amount to $250 billion in today’s dollars.
"The projections incorporate the reductions in Medicare's payment to physicians scheduled for 2015 and reductions in Medicare spending specified in the Budget Control Act of 2011, as amended, for 2015 through 2024," according to the report. After that year, CBO expects Medicare to continue to pay benefits according to current law.
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Although health-care spending growth has slowed in recent years, high and rising amounts of such spending continue to create challenges not only for the federal government but also for state and local governments, businesses and consumers.
Total national spending on health-care services and supplies rose from 4.6 percent of GDP in 1960 to 16.2 percent in 2012. New medical technologies, rising personal income and the declining share of costs paid out of pocket contributed to that growth.
The future of health-care spending will depend on several factors, such as federal law, demographic changes and the behavior of households, businesses, and state and local government.
The overall CBO report paints a bleak economic picture.
It expects entitlement programs such as Social Security, Medicare and Medicaid to push the national debt to unsustainable levels. The current federal debt is 74 percent of GDP, a figure twice that reported in 2008. The CBO projects the share of debt will grow to 106 percent of GDP by 2039.