econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



posted on 10 August 2016

CBO Projects Substantial Increases In Spending For Social Security And Health Care Programs

from the Congressional Budget Office

-- this post authored by Xiaotong Niu and Julie Topoleski

CBO projects that spending for Social Security would increase noticeably as a share of the economy - from 4.9 percent of gross domestic product (GDP) in 2016 to 6.3 percent in 2046 - if current laws generally remained unchanged. Spending for the major health care programs is projected to grow even faster: Net outlays for those programs would increase from 5.5 percent of GDP now to 8.9 percent in 2046. (The major health care programs include Medicare, Medicaid, and the Children's Health Insurance Program, as well as spending on subsidies for health insurance purchased through the marketplaces established by the Affordable Care Act and related spending.)

About three-quarters of the increase in spending for the major health care programs would be for Medicare.

Continued growth in those programs would boost the already large share of the federal budget going to people who are 65 or older. By 2046, spending for Social Security and the major health care programs (mostly Medicare) for people 65 or older is projected to account for about half of all federal noninterest spending.

CBO's projections incorporate the assumptions that the laws governing those programs will not change and that Social Security and Medicare will pay benefits as scheduled under current law regardless of the status of the programs' trust funds. That approach is consistent with a statutory requirement that CBO's 10-year baseline projections incorporate the assumption that funding for entitlement programs is adequate to make all payments required by law.

The Aging Population and Rising Health Care Costs Are Projected to Boost Spending for Those Programs

Two factors - the aging of the population and excess cost growth in health care - account for the projected rise (with respect to GDP) in federal spending on Social Security and the major health care programs. Excess cost growth is the extent to which health care costs per beneficiary, as adjusted for demographic changes, grow faster than potential GDP per capita.

Under current law, gross spending on Social Security and the major health care programs is projected to be 16.3 percent of GDP in 2046. (Gross spending on Medicare excludes the effects of certain Medicare receipts, mostly premiums paid by enrollees.) Without aging or excess cost growth, that amount would be 10.7 percent - compared with today's value of 11.0 percent. Aging accounts for 3.3 percentage points, or roughly 60 percent of the difference. Excess cost growth accounts for the rest, 2.3 percentage points.

The Aging Population. The aging of the baby boomers and continued increases in life expectancy will substantially increase the share of the population that is 65 and older. Between 2016 and 2046, that share will increase from 15 percent to 21 percent.

Population, by Age Group

With more people over 65, there will be more Social Security beneficiaries and higher federal spending on benefits. That trend accounts for nearly all the projected long-term increase in Social Security spending as a percentage of GDP.

Aging also contributes to the projected increase in spending for the major health care programs as a share of GDP - particularly for Medicare. As the population ages, Medicare beneficiaries will make up more of the population. Beneficiaries will be older, on average, and older beneficiaries tend to have higher average spending. Both of those trends would increase Medicare spending. CBO estimates that aging explains just under half of the increase in spending for the major health care programs as a share of GDP between 2016 and 2046.

Key Factors Underlying Growth in Spending

Rising Health Care Spending per Beneficiary. Even though growth in health care spending has slowed in recent years, CBO projects that excess cost growth will be greater than zero, on average, over the next 30 years. For the major health care programs, excess cost growth accounts for just over half of the projected increase in spending as a share of GDP between 2016 and 2046. (Because such cost growth leads to higher federal debt - which slows the growth of GDP - it slightly raises projected spending for Social Security as a share of GDP.)

About the Authors

Xiaotong Niu is an analyst in the Long-Term Analysis Unit at CBO, and Julie Topoleski is chief of that unit.

>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical News Post Listing










Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, using Livefyre just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.



You can also comment using Facebook directly using he comment block below.





Econintersect Contributors


search_box

Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.


Take a look at what is going on inside of Econintersect.com
Main Home
Analysis Blog
Big Mess in Italy
Are You Feeling the Economic Surge?
News Blog
What We Read Today 05 December 2016
Why We Have Different Blood Types
November 2016 Conference Board Employment Index Improved.
November 2016 ISM and Markit Services Index Mixed
Are All Collateralized Loan Obligations Equal?
A Third Of Homes Sold For The List Price Or More In August 2016
It Is Still Not Too Late To Find A Seasonal Job
Infographic Of The Day: Are You A Good Listener
Early Headlines: Italy Votes 'No', Renzi Resigns, Euro Plunges 2 Pct, Asia Stocks Down, Trump Foreign Policy By Tweet, Dakota Pipeline Stopped, India Serv. PMI Contracts And More
Most Read Articles Last Week Ending 03 December
The World's Most Creative Cities
The Countries Where People Aren't Interested In Politics
Fidel Castro And The Revolution That Almost Wasn't
Investing Blog
Market Sector Analysis: 04 December 2016
Trumponomics: The New Hope
Opinion Blog
The Labor Market Working Nine To Five
Why Did Trump Win? A Different Perspective, Part 3
Precious Metals Blog
Silver Prices Rebounded Today: Where They Are Headed
Live Markets
05Dec2016 Market Update: DOW Grows At Fastest Pace In A Year, WTI Crude Steady At $52, US Dollar Still Slipping, Investors Becoming Tired (and Sloppy)
Amazon Books & More






.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government



Crowdfunding ....






























 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2016 Econintersect LLC - all rights reserved