CBO: Federal healthcare costs skyrocketing


Federal spending on major healthcare programs will reach 6.3 percent of gross domestic product by 2020, CBO said — up from 4.7 percent this year, and far outstripping a 40-year average of just 2.7 percent.

Medicare makes up about half of the projected spending. The program for retirees will cost the government more than $700 billion in 2020, or 3.5 percent of GDP, according to CBO's estimates. Medicaid clocks in at $514 billion, or 2.3 percent of GDP.

Roughly 0.5 percent of GDP will go toward the Children's Health Insurance Program and subsidies for private insurance under President Obama's healthcare law, CBO said.

Those figures indicate that "ObamaCare" isn't the explosion in federal spending Republicans fear, at least in comparison to Medicare. But Congress has come up with more aggressive plans to roll back spending on the healthcare law than to tackle Medicare spending.

CBO's latest report, released as lawmakers return seriously to the looming fiscal cliff, lists healthcare cost-cutting proposals CBO has previously analyzed.

Raising the retirement age for Medicare — a change Obama and House Speaker John BoehnerJohn Andrew BoehnerFeehery: The next Republican wave is coming Rift widens between business groups and House GOP Juan Williams: Pelosi shows her power MORE (R-Ohio) agreed to in their failed "grand bargain" — would save the federal government about $30 billion in 2020, CBO said. Raising seniors' premiums would save another $40 billion. Limiting medical malpractice suits, an area where Obama has at least said he's willing to work with Republicans, adds $10 billion.

The biggest savings on CBO's list come from repealing the healthcare law's coverage expansion — eliminating subsidies and the Medicaid expansion, while leaving in place Medicare cuts and tax increases.

Repealing the coverage expansion would save $150 billion, cutting total healthcare spending by 15 percent, CBO said. But repeal is politically impossible now that Obama has won a second term and Democrats have expanded their Senate majority. It also would leave roughly 29 million people uninsured.

CBO has said repealing the entire healthcare law would increase the deficit because the law includes taxes and spending cuts that outweigh its new spending.

Those provisions are the ones Republicans have attacked most aggressively, deriding the healthcare law as a tax cut of historic proportions and hammering Democrats for the law's $716 billion reduction in Medicare payments to doctors and insurance companies.

Democrats, meanwhile, attack Republicans for their plan to change the basic structure of Medicare. Democrats support some changes to the program, but have vowed to preserve the Medicare "guarantee." The GOP plan would give seniors a fixed amount of money to put toward a health plan, requiring them to pay more out of pocket for the level of coverage Medicare now provides.