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 CBO Sounds Alarm on Long-Term Health Of Medicare, Medicaid

 

 

The United States will have to rethink its priorities as aging baby boomers fill the Social Security, Medicare, and Medicaid safety nets, the Congressional Budget Office (CBO) said in a dire warning as part of a summary of its annual budget forecast.

“The aging of the baby boom generation portends a significant and sustained increase in the share of the population receiving benefits from Social Security and Medicare, as well as long term care services financed by Medicaid,” CBO said in its report, released June 5.

But health care costs will probably increase in any case, budget officials concluded. “Without significant changes in government policy, those factors will boost federal outlays relative to GDP [Gross Domestic Product] well above their average of the past several decades—a conclusion that holds under any plausible assumption about future trends in demographics, economic conditions, and health care costs,” the summary said.

Others have sounded similar alarms in the past, but CBO is generally considered to be the most even-keeled of Washington’s many budget shops. Its findings are stark.

If the nation’s current laws stay in place, CBO found, “spending on the major federal health care programs alone would grow from more than 5 percent of GDP today to almost 10 percent in 2037 and would continue to increase thereafter,” the summary said. “Altogether, the aging of the population and the rising cost of health care would cause spending on the major health care programs and Social Security to grow from more than 10 percent of the GDP today to almost 16 percent” 25 years from now.

“Absent substantial increases in federal revenue, such growth in outlays would result in greater debt burdens than the United States has ever experienced.”

The agency refrained from offering any solutions to the problems, but urged the nation’s leaders to proceed cautiously.

“Policymakers face difficult trade-offs,” CBO said. “On the one hand, cutting spending or increasing taxes slowly would lead to a greater accumulation of government debt and might raise doubts about whether longer-term deficit reduction would ultimately take effect. On the other hand, abruptly implementing spending cuts or tax increases would give families, businesses, and state and local governments little time to plan and adjust and would require more sacrifices sooner from current older workers and retirees for the benefit of younger workers and future generations.
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