Congressional Budget Office

The Long-Term Costs of Major Health Care Programs:

Fiscal Implications and Projection MethodsPresentation to the Joint Network on theFiscal Sustainability of Health Systems,

Organisation for Economic Co-operation and Development,Paris, France

February 16, 2015

Jessica Banthin, Ph.D.Deputy Assistant Director, HealthCongressional Budget Office

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Who Makes Federal Budget Projections in the United States?

■ Executive branch

■ Legislative branch

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What Projections Does the Congressional Budget Office Make?

■ 10-year baseline budget projections—three times per year

■ Long-term budget projections—once a year

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What Is the Purpose of CBO’s Budget Projections?

■ Illustrate implications of generally following current law

■ Serve as a benchmark for measuring proposed changes

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Federal Debt Held by the Public

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Debt Held by the Public, Total Spending, and Total Revenues

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Components of Total Revenues

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Components of Total Spending

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Federal Spending on Major Health Care Programs, by Category

1999 2004 2009 2014 2019 2024 2029 2034 20390

1

2

3

4

5

6

7

8

Medicare

Medicaid, Children'sHealth Insurance

Program, and Exchange Subsidies

Percentage of Gross Domestic Product

Actual Extended Baseline Projection

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How is Health Care Spending Projected?

■ Next 10 years: detailed analysis of programs■ Later years: fairly mechanical estimates

– Number of people who will receive benefits– Growth in spending per beneficiary

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Changes in Population, by Age Group

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Causes of Projected Growth in Federal Spending for Social Security and Major Health Care Programs

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Possible Approaches to Reducing Federal Health Care Spending

■ Improve the health of the population

■ Reduce federal subsidies for health insurance

■ Reduce tax preferences for employment-based health insurance

■ Pay Medicare providers in different ways

■ Make larger structural changes to federal health care programs

■ Undertake other possible reforms