On Wednesday, the Congressional Budget Office lowered its Medicare spending projections for the next decade by nearly $170 billion, Reuters reports.
Medicare Spending Projections
According to the CBO report, Medicare is expected to spend $19 billion less in 2012 than previously projected, with total spending projected to be at $550 billion. Over the next 10 years, total Medicare spending will be $169 billion less than previously forecast, with total spending through 2022 projected at $7.7 trillion.
CBO analysts said the changes reflect reduced spending growth for health care providers and prescription drugs spurred by the economic recession in 2007.
CBO Director Doug Elmendorf at a news conference on Wednesday said Medicare's "slower growth" is "consistent with slower growth in health care costs" in the general economy. This is the third consecutive year that CBO has had to reduce its Medicare spending forecasts, he noted (Morgan, Reuters, 8/22).
According to CBO's new estimates, Medicare spending over the 10-year period will take up a larger share of the economy, growing from 3.7% of the Gross Domestic Product in 2013, to 4.3% of the GDP in 2022 (Nather, Politico, 8/22).
Although CBO lowered its projected spending figures, the new data indicate that the Medicare hospital insurance fund is still on track to become insolvent by 2024.
Medicaid Spending Forecasts
CBO in its report also lowered the spending forecast for Medicaid over the next decade by $288 billion, or 7% less than previously projected, to a total of $375 billion.
According to Reuters, the change largely was in response to Supreme Court's decision to allow states to opt of the federal health reform law's Medicaid expansion (Reuters, 8/22). Medicaid spending will increase from 1.7% of the GDP in 2013, to 2.4% in 2022, the report estimated (Politico, 8/22).