Monday, February 6, 2012

Federal Health Care Spending Expected To Double Over Next Decade

Federal health care spending is projected to more than double in the coming decade, according to the Congressional Budget Office in its report, The Budget and Economic Outlook: Fiscal Years 2012 to 2022.

Total federal health care spending on mandatory programs, such as Medicare and Medicaid, will grow from $847 billion in the current fiscal year to $1.8 trillion in fiscal 2022, according to the CBO.

The provisions of the Patient Protection and Affordable Care Act (ACA) that will have spending impacts include new state health insurance exchanges, on which the federal government will spend $645 billion over the ten-year span. Also, the ACA’s Medicaid provisions are projected to drive growth in its enrollment from 67 million to 95 million people and federal spending on it from $275 billion to $605 billion over the next ten years.

The projection also includes an “alternative fiscal scenario,” based on likely congressional actions, such as extending a popular tax cut that is scheduled to expire. A significant health care item under the alternate scenario is the additional $360 billion Medicare is likely to spend over the ten years above the baseline projections if it replaces a planned 27.4 percent physician payment cut in March with a continuation of current rates.

“If those payments were increased over time, the impact on Medicare outlays would be even greater,” according to the report.

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For a comprehensive analysis of the ACA, and additional information on health reform and other developments in employee benefits, just click here.


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