Another CBO Report Makes Crystal Clear What Will Drive The Deficit In The Future

The Congressional Budget Office came out with a set of charts detailing the status and future of mean-tested government programs. 

A means-tested program is one that incorporates the income of an applicant prior to approving or calculating benefits. Unlike Social Security — which every citizen is entitled to after a certain age — means tested programs are designed specifically as safety net programs.  

For instance, Medicaid pays for medical care for the poor, SNAP is the government food stamp program, and Pell Grants fund college education for youth from low income families:

Means Tested Programs Medicare Composition

Photo: Congressional Budget Office

Moreover, these means-tested programs are one of the long-term drivers of the deficit and debt, primarily to increasing health care costs:

Cost increased medicare means tested programs

Photo: Congressional Budget Office

The causes of the cost increase are increased participation and increased spending per participant, which themselves are the result of five underlying root causes:

How means tested mandatory spending grows

Photo: Congressional Budget Office

There has been a recent marked increase in spending in each program as a result of increased participation and rising costs. Still, this may have to do with the economic problems in the latter years of the review:

Increase in use and spending of welfare and medicare

Photo: Congressional Budget Office

What’s interesting is that these CBO charts narrow down the real driver of the deficit when it comes to what are sometimes derisively considered “welfare” programs. Over 10 years, the main driver of the deficit will largely come from the health care spending as costs increase, not an increased reliance on the government for food stamps or other programs.

CBO projections indicate that spending on most means tested programs will decrease by 2023, however spending on Medicaid will jump over the next 10 years due to the primary driver of Medicaid spending, rising health care costs:

Long term medicare and other means tested spending growth

Photo: Congressional Budget Office

Check out the full set of charts here.

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