CBO Warns That Healthcare Reform Will Increase Federal Spending

Reform translates to more federal healthcare spending.  The federal government’s share of dollars spent on healthcare is expected to soar from five percent of the current GDP to approximately 10 percent by 2035.  The increases are likely to continue unabated after that.  These projections are based partly on the recently passed healthcare reform legislation, which is expected to increase federal spending in the next 20 years, according to the Congressional Budget Office’s (CBO) analysis, “The Long-Term Budget Outlook”.

“The retirement of the baby boom generation portends a significant and sustained increase in the share of the population receiving benefits from Social Security, Medical and Medicaid.  Moreover, per-capita spending for healthcare is likely to continue rising faster than spending per person on other goods and services for many years,” according to the report.  The CBO predicts that these factors will increase federal spending relative to the overall economy in the future.  Only a major change in government policy will reverse this trend.  Once all provisions of the new healthcare law are implemented in 2014, there is a strong possibility that federal spending will decrease by 2030.  According to the CBO, reform could yield reduced spending over time.

Peter Orszag, director of the White House Office of Management and Budget, notes “CBO reiterates that the Affordable Care Act will reduce the deficit by more than $100 billion in the current decade and more than $1 trillion in the decade after that – which represents the most deficit reduction enacted since the 1990s.”

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