Below is an overview of additional cost growth, its contribution to rising healthcare costs, and why it matters for fiscal sustainability. Here we focus on the latter of those factors and its effect on the federal budget. When such cost growth occurs, the amount the federal government spends on healthcare programs will rise. Additional cost growth: Generally defined as the rate at which healthcare costs, adjusting for demographic changes, outpaces the growth rate of the economy.And as more people reach age 65, enrollment and therefore spending on federal programs like Medicare rises. The changing demographics of the population: Older individuals spend more, on average, on healthcare than younger individuals. ![]() The amount the federal government spends on major healthcare programs is broadly influenced by two factors: By 2052, such spending will account for nearly 40 percent of the federal budget, exceeding the total amount spent on discretionary programs, such as defense and education, by nearly 50 percent. Such spending is projected to rise by 68 percent over the next decade and will exceed all other categories of federal spending in 2030. ![]() One of the largest drivers of that rising debt is federal spending on major healthcare programs, such as Medicare and Medicaid. Under current law, the nation’s debt trajectory will rise from nearly 100 percent of gross domestic product (GDP) at the end of 2021 to 185 percent in 2052. As the recent long-term projections from the Congressional Budget Office (CBO) show, the national debt is on an unsustainable path.
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