The single greatest threat to U.S. budget stability is federal healthcare spending, according to a recent report from the Congressional Budget Office (CBO). Under current law, Medicare spending will nearly double from $528 billion this year to more than $1 trillion in 2020, with Medicaid spending coming in at $458 billion.
And that’s if a scheduled 21% reduction in Medicare physician payments actually happens this year, which of course it won’t. Congress has intervened in planned cuts since 2003, and this year should be no different. We’ll just roll merrily along, print money, hope someone buys the national debt and leave it to our children to figure a way out of this fiscal mess.
U.S. Health care spending rose to almost $2.5 trillion in 2009 – 17.3% of GDP. Medical spending has outpaced the broader economy for decades, and in a mere two years the federal government will be paying for more than half of it. With millions of boomers ready to sign on to the federal health care rolls, we can anticipate health care consuming upwards of 20% of GDP in less than 10 years.
Reality, some say, is a consensual hallucination. Certainly the linear projection of our health system status quo, with infinite desires meeting finite resources, fits that definition.