- The Congressional Budget Office updated the federal budget and economic outlook report Tuesday.
- More than half of the estimated $55 billion increase - about 6% - in spending for federal healthcare programs in 2016 will be driven by Medicare with a growth of about $30 billion mainly caused by the increased spending per person for prescription drugs, the report states.
- The annual budget shortfall was projected to go from $520 billion in 2018 to $1.2 trillion in 2026 and the increase was attributed to a significant growth in spending on healthcare and retirement programs.
This year will be the first time the annual budget shortfall will increase since 2009. In addition, the non-partisan agency predicts mandatory spending to see an increase of $1.7 billion by 2026.
The country's aging population, which is using more Social Security and requiring more Medicare coverage, is driving most of the spending increases, according to the report. Compared to 50 years ago, the number of people who are 65 years old and older has more than doubled, CBO found. As a result, Medicare outlays will remain at about 3% of GDP until 2018 but then increase on an annual basis through 2026.
"Over the next decade, as members of the baby-boom generation age and as life expectancy continues to increase, that number is expected to rise by more than one-third, boosting the number of beneficiaries of those programs," the report states, adding, "As a result, projected spending for people age 65 or older in three large programs — Social Security, Medicare, and Medicaid — increases from roughly one-third of all federal noninterest spending in 2016 to about 40% in 2026."
In contrast, an Urban Institute study published in July predicted that the country will spend $2.6 trillion less on healthcare from 2014 to 2019 than the increase projected post-ACA implementation. Its findings were based on CMS' health expenditure data.
"Although healthcare spending grew more slowly in the past several years than it has historically, CBO projects that spending per enrollee in federal healthcare programs will grow more rapidly over the coming decade than it has in recent years," the agency wrote.