Posts Tagged ‘Peter Orszag’

CBO Warns That Healthcare Reform Will Increase Federal Spending

Monday, July 26th, 2010

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.”

What If There Is No Healthcare Reform?

Wednesday, February 17th, 2010

If healthcare reform fails, costs will rise to 19.3 percent of the GDP by 2019.  The rationale for healthcare reform is simple – cover most of the population and rein in rising costs.  But what happens if healthcare reform isn’t enacted?  The answer is not good.

“Failure to enact health reform will result in increasing numbers of people without health insurance because fewer employers will offer it and many employees will not be able to pay the cost of plans that are available,” says Stephen Zuckerman, a health economist at the Urban Institute think tank in Washington, D.C.  “For people not offered employer coverage, many will not be able to get coverage due to pre-existing conditions that insurers won’t cover or because premiums won’t be affordable.  Even people with coverage will find costs becoming a greater financial burden.”

The numbers are startling.  Americans paid $2.5 trillion for healthcare in 2009, equal to 17.3 percent of the nation’s GDP.  As the economy starts to grow again, so will healthcare costs.  The federal Centers for Medicare and Medicaid Services (CMS) estimates that without reform, healthcare will rise to 19.3 percent of the GDP by 2019.  According to Urban Institute statistics, if healthcare reform is not enacted, the number of Americans without insurance will climb to 57 million or 20.1 percent of the population – and that is the best-case scenario.

The 16.5 percent of Americans now covered by Medicaid and the Children’s Health Insurance Program will rise to 18.3 percent.  Medicare and Medicaid spending will cost approximately $725 billion in 2010, 50 percent more than Congress appropriates for all other domestic agencies.  By 2014, the cost is projected to be $950 billion.

Inaction will only increase the budget deficit.  Peter Orszag, the White House budget director, warns that “The fiscal course that we’re on, out in 2020 and 2030 and 2040, is unsustainable and needs to be addressed.  If we don’t address rising healthcare costs, there’s nothing else that we’re going to be able to do that will alter that basic fact.”