Yesterday, we noted that the Congressional Budget Office was forecasting that many short-term drivers of the deficit were being taken care of through upcoming cuts and revenue increases. But, the CBO also reported that one of the most important long term drivers of the debt is becoming less of a problem.
This is incredible news for both deficit hawks and people who don’t want to further reduced the size of government.
The acceleration of the growth rate of the cost of healthcare was and remains one of the primary drivers of the future national debt.
One of the entire points of the health care fight was to get a bill that just slows down that growth so that GDP could catch up. The hope is to decrease the severity of the parabolic increase in health care costs.
So it’s excellent news that the nonpartisan, apolitical Congressional Budget Office reported they expect the deceleration of health care cost growth to have an impressive impact on the budget down the road.
Medicaid and Medicare. In recent years, health care spending has grown much more slowly both nationally and for federal programs than historical rates would have indicated. (For example, in 2012, federal spending for Medicare and Medicaid was about 5 per cent below the amount that CBO had projected in March 2010.) […] From the March 2010 baseline to the current baseline, such technical revisions have lowered estimates of federal spending for the two programs in 2020 by about $200 billion—by $126 billion for Medicare and by $78 billion for Medicaid, or by roughly 15 per cent for each program.
In short: The CBO was surprised to find that soon the U.S. will see major savings on Medicare and Medicaid because health care spending growth has slowed. That will save billions of dollars down the line.
According to Sarah Kliff at WonkBlog:
Squeezing $200 billion out of entitlement programs is nothing to sneeze at; that’s about double the revenue the government would generate by raising the Medicare eligibility age from 65 to 67.
Here’s the expected savings for federal health care programs as a result of the deceleration of cost growth:
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