CBO Projections Released for Medicare and Medicaid Spending Over Coming Decade
Congressional Committee Chairmen Call for Measures to Reduce Spending on Health Programs
February 1, 2016 03:28 PM
On Monday, January 25, 2016, the Congressional Budget Office (CBO) released “The Budget and Economic Outlook: 2015 to 2025” which estimates federal spending and revenues, as well as the deficit and federal debt, over the coming decade. CBO projected that spending on major health care programs would exceed spending on Social Security and would nearly double over the period of 2015 to 2025.
“Federal outlays for major health care programs—including Medicare, Medicaid, subsidies for health insurance purchased through exchanges and related spending, and the Children’s Health Insurance Program (CHIP)—are projected to increase more rapidly than outlays for Social Security, growing from 5.1 percent of GDP (net of premium payments and other offsetting receipts for Medicare) in 2015 to 6.2 percent in 2025,” CBO stated in the report. “In CBO’s baseline projections, that spending grows robustly—at an average rate of nearly 7 percent per year—and thus nearly doubles between 2015 and 2025, reaching $1.9 trillion, or 6.8 percent of GDP, by the end of that period.”
In response to CBO’s projections, two committee chairmen in U.S. Congress—House Ways & Means Chairman Kevin Brady (R-TX) and Senate Health, Education, Labor & Pensions Committee Chairman Lamar Alexander (R-TN)—called for spending reductions and reforms to health care programs. Among the measures Chairman Brady called for was the Medicare Post-Acute Care Value-Based Purchasing Act (H.R. 3298), which would establish a single value-based purchasing program (VBP) for all post-acute care (PAC) services.
“CBO has once again confirmed what we all know: Medicare as we know it is unsustainable and we need to act now to save it,” Chairman Brady said in a press release. The statement cited the intention for the Committee to move forward with H.R. 3298, as well as other “actions large and small to save Medicare for the long term and ensure our seniors can always access care.”
NAHC has already joined with other PAC providers to express concerns with the design of the VBP program, as well as the fact that the legislation does not adhere to the implementation timeline that was established under the Improving Medicare Post-Acute Care Transformation (IMPACT) Act of 2014, which has not yet been fully implemented (for more information, see previous NAHC Report article here).
Chairman Alexander called for a return to the measures that were included in the Simpson-Bowles proposal, which included negative proposals for home care and hospice and would have reduced health care spending by nearly $700 billion over 10 years. “Millions of Americans are counting the days until they are eligible for Medicare, and today’s Congressional Budget Office report tells us that in just 10 years Medicare won’t be able to help seniors pay all of their hospital bills,” Chairman Alexander said.
NAHC has expressed opposition to measures negatively affecting home care and hospice contained in the Simpson-Bowles proposal, including those to add copays or other out-of-pocket expenses for home care and hospice, reduce Medicare reimbursement rates for providers, and cut federal payments to Medicaid.
Given the current dynamics in Washington, action on any large structural bill to reform or reduce Medicare and Medicaid spending, such as the Simpson-Bowles proposal, is unlikely in the coming year. However, there is a serious enough potential for movement on relatively smaller proposals, such as H.R. 3298, to require close monitoring by the home care community.
Stay tuned to NAHC Report for further coverage of any potential developments on these issues.