The Long-Term Outlook for
Health Care Spending
November 2007
Numbers in the text and tables may not add up to totals because of rounding.
The figure on the cover, explained in detail in Box 2, shows that the aging of the population accounts for only a modest fraction of the projected growth in federal spending on Medicare and Medicaid. The main factor is excess cost growth—or the extent to which the increase in health care spending exceeds the growth of the economy.
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PREFACE |
Spending on health care has been growing faster than the economy for many years, representing a challenge both for the government's two major health insurance programs, Medicare and Medicaid, and for the private sector. A prologue to the Congressional Budget Office's (CBO's) upcoming long-term budget outlook, to be released next month, this study presents the agency's projections of federal spending on Medicare and Medicaid and national spending on health care over the next 75 years. The goal of the projections is to examine the implications of a continuation of current federal law, rather than to make a prediction of the future. In reality, federal law will change; nevertheless, the projections provide a useful measure of the scope of the problem facing the nation under current law.
Noah Meyerson, Lyle Nelson, Michael Simpson, and Julie Topoleski of CBO's Health and Human Resources Division prepared the study, with valuable contributions from Ignez Tristao. The study benefited from comments by Colin Baker, James Baumgardner, Thomas Bradley, Philip Ellis, Keith Fontenot, Matthew Goldberg, Arlene Holen, Joyce Manchester, William Randolph, Jonathan Schwabish, Sven Sinclair, Robert Sunshine, and Bruce Vavrichek of CBO. Members of CBO's Panel of Health Advisers also provided useful comments. (The assistance of external reviewers implies no responsibility for the final product, which rests solely with CBO.)
John Skeen edited the study, and Christine Bogusz proofread it. Maureen Costantino prepared it for publication and designed the cover. Lenny Skutnik printed the initial copies, Linda Schimmel handled the print distribution, and Simone Thomas prepared the electronic version for CBO's Web site.
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