CBO: 1974, 2014 & 2024
August 27, 2014 Leave a comment
CBO has released a long term budget outlook update. It has more detailed than average discussion of their assumptions about economic growth–an interesting read. They also reduced again their 10 year Medicare spending projections. The continuing deceleration of Medicare spending is the most important policy story that does not get much attention. Still plenty of uncertainty about its etiology and how long it will last, but it is good news (which doesn’t travel fast), that is cooked into the cake so to speak, whatever comes next.
This figure 1-5 (p. 19) comparing the federal budget in 1974, 2014 and 2024 projection from the report caught my eye. The huge growth in Major Health Care Programs is both demographic (the baby boomers) and health care inflation the past 40 years (ACA contributes, but is not the main thing going on; see p. 12, table 1-2). Even as health care inflation has moderated, the baby boomers moving into Medicare (and also Medicaid via long term care expenses) foretells continued growth of the Major Health Care programs bucket in the federal budget. And the increase in Social Security is wholly demographic.
The demographic drivers of this were inevitable in 1974.