While the U.S. government tries to trim the budget and begins making some major cuts in traditionally expensive areas such as the Department of Defense, there is one area that it will utterly fail to make any cuts whatsoever in the future: healthcare.
In fact, the Congressional Budget Office (CBO) has estimated that federal spending on Medicare and Medicaid will double by 2022, reaching an astonishing $1.8 trillion: about seven percent of the entire U.S. economy. The reasons are multi-faceted: skyrocketing costs of healthcare, drugs, imaging and other technologies, coupled with an aging population (the oldest of the Baby Boomers reached 65 last year and are now officially senior citizens, with all the expected age-related health problems). While many Baby Boomers still carry private insurance, the state of the economy is unlikely to help the situation: low interests rates on investments and eroding pension will likely reduce the expected income of many retirees in their golden years. In any case, statistics show that Medicaid pays for the majority of U.S. nursing home care, with Medicare covering another significant slice.
“Under both CBO's baseline and its alternative fiscal scenario, the aging of the population and rising costs for healthcare will push spending for Social Security, Medicare, Medicaid, and other federal healthcare programs considerably higher as a percentage of GDP,” according to the CBO report.
To prevent that outcome, which the report says frankly would raise healthcare-related federal debt to “insupportable levels,” policymakers will be required to substantially restrain the growth of spending for those programs – though how that can be done given the expansion of the elderly population, the skyrocketing costs of private insurance and the still-stagnant state of the economy is unclear. Budget officials must also figure out a way to raise revenues above their historical share of GDP, or pursue some combination of those two approaches, says the report.
One way or another, it will be a significant challenge for Washington in the future, particularly as the topic of healthcare is so politically volatile and often subject to partisan in-fighting.
The full CBO report may be found here:
Dave Rodgriguez is Editor-in-Chief of HealthTechZone. To read more of his articles, please visit his columnist page.Edited by
Stefania Viscusi
