CBO: Long-term Outlook for Federal Spending

Health care costs will increase from 6 percent to 13 percent of GDP

Chart 2.91: CBO Estimate - Federal Spending

The Congressional Budget Office Long-term Budget Outlook released in June 2012 projects the trends in the major federal spending programs, based on current program rules, and projects the likely spending out to 2087.

The outlook is fairly clear. Social Security will expand from a spending level of 5 percent of GDP today to about 6 percent by 2050.

But Medicare and Medicaid, the two big federal health care programs, will expand from 5.4 percent at present to over 11 percent of GDP by 2050.

The CBO assumes that other programs, including interest on the national debt, will decrease due to the pressure of health care spending from the current 11.6 percent of GDP to 6.5 percent of GDP by 2050.

Medicare Trustees Report

Medicare will cost about 6 percent of GDP by the middle of the 21st century.

Chart 2.92: Medicare Trustees Report

Every year the Center for Medicare & Medicaid Services publishes a Medicare Trustees Report. The latest report was published on April 23, 2012.

The latest report shows that Medicare costs about 1.7 percent of GDP for the Part A Hospital Insurance, 1.5 percent of GDP for the Part B Supplementary Medical Insurance and 0.5 percent of GDP for the Part D drug benefit.

The cost of Medicare is expected increase rapidly in the short term, to breach 4 perent of GDP by 2020 and cost over 5 percent of GDP by 2028. Medicare is expected to cost over 6 percent of GDP by 2040.

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Prepared by Christopher Chantrill.
email: chrischantrill@gmail.com