health care and the federal budget
TRANSCRIPT
Congressional Budget Office
2015 Health Care Forecast Conference University of California, Irvine
February 19, 2015
James Baumgardner Deputy Assistant Director
Health Care and the Federal Budget
1 C O N G R E S S I O N A L B U D G E T O F F I C E
Analysis of Premium Support Options
2 C O N G R E S S I O N A L B U D G E T O F F I C E
Key Operations Under the Illustrative Second-Lowest-Bid Option for Premium Support
3 C O N G R E S S I O N A L B U D G E T O F F I C E
Key Operations Under the Illustrative Second-Lowest-Bid Option for Premium Support (Continued)
4 C O N G R E S S I O N A L B U D G E T O F F I C E
Effects of Options on Spending for Medicare Benefits
5 C O N G R E S S I O N A L B U D G E T O F F I C E
Average Annual Premiums Charged by Plans for Medicare Part A and B Benefits Under Illustrative Premium Support Options, by Fee-for-Service Spending in a Region, Weighted by Population, 2020
Dollars
6 C O N G R E S S I O N A L B U D G E T O F F I C E
The Ten-Year Budget Outlook
7 C O N G R E S S I O N A L B U D G E T O F F I C E
CBO’s Baseline Budget Projections, in Billions of Dollars
Total Actual, 2016- 2016-
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2020 2025
Revenues 3,021 3,189 3,460 3,588 3,715 3,865 4,025 4,204 4,389 4,591 4,804 5,029 18,652 41,670
Outlays 3,504 3,656 3,926 4,076 4,255 4,517 4,765 5,018 5,337 5,544 5,754 6,117 21,540 49,310 ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ _______________ _______________ _______________
Deficit -483 -468 -467 -489 -540 -652 -739 -814 -948 -953 -951 -1,088 -2,887 -7,641
Debt Held by the Public at the End of the Year 12,779 13,359 13,905 14,466 15,068 15,782 16,580 17,451 18,453 19,458 20,463 21,605 n.a. n.a.
Note: n.a. = not applicable.
8 C O N G R E S S I O N A L B U D G E T O F F I C E
CBO’s Baseline Budget Projections, as a Percentage of Gross Domestic Product
Total Actual, 2016- 2016-
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2020 2025
Revenues 17.5 17.7 18.4 18.2 18.1 18.1 18.0 18.1 18.1 18.2 18.2 18.3 18.1 18.2
Outlays 20.3 20.3 20.8 20.7 20.7 21.1 21.4 21.6 22.0 21.9 21.8 22.3 21.0 21.5 ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ _____________ _____________ _____________
Deficit -2.8 -2.6 -2.5 -2.5 -2.6 -3.0 -3.3 -3.5 -3.9 -3.8 -3.6 -4.0 -2.8 -3.3
Debt Held by the Public at the End of the Year 74.1 74.2 73.8 73.4 73.3 73.7 74.3 75.0 76.1 76.9 77.7 78.7 n.a. n.a.
Note: n.a. = not applicable.
9 C O N G R E S S I O N A L B U D G E T O F F I C E
Components of the Total Increase in Outlays in CBO’s Baseline Between 2015 and 2025
Total Increase in Outlays:$2.5 Trillion
All Other Programs(16%)
Net Interest(24%)
Social Security(28%)
Major Health CarePrograms
(32%)
10 C O N G R E S S I O N A L B U D G E T O F F I C E
Deficit Under Selected Alternatives
0
200
400
600
800
1,000
1,200
1,400
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Billions of Dollars
Baseline
11 C O N G R E S S I O N A L B U D G E T O F F I C E
Deficit Under Selected Alternatives (Continued)
0
200
400
600
800
1,000
1,200
1,400
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Billions of Dollars
Reduce the Number of Troops Deployed Overseas
Baseline
12 C O N G R E S S I O N A L B U D G E T O F F I C E
Deficit Under Selected Alternatives (Continued)
0
200
400
600
800
1,000
1,200
1,400
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Billions of Dollars
Increase Discretionary Appropriations at Inflation Baseline
13 C O N G R E S S I O N A L B U D G E T O F F I C E
Deficit Under Selected Alternatives (Continued)
0
200
400
600
800
1,000
1,200
1,400
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Billions of Dollars
Maintain Medicare Physician Payment at Current Rates Baseline
14 C O N G R E S S I O N A L B U D G E T O F F I C E
Deficit Under Selected Alternatives (Continued)
0
200
400
600
800
1,000
1,200
1,400
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Billions of Dollars
Prevent Automatic Spending Reductions of the Budget Control Act Baseline
15 C O N G R E S S I O N A L B U D G E T O F F I C E
Deficit Under Selected Alternatives (Continued)
0
200
400
600
800
1,000
1,200
1,400
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Billions of Dollars
Extend Expiring Tax Provisions
Baseline
16 C O N G R E S S I O N A L B U D G E T O F F I C E
The Labor Force, Employment, and Unemployment
Percentage of the Population
17 C O N G R E S S I O N A L B U D G E T O F F I C E
Interest Rates on Treasury Securities
Percent
18 C O N G R E S S I O N A L B U D G E T O F F I C E
Effects of the Affordable Care Act on Health Insurance Coverage, 2025
Millions of Nonelderly People
Current LawWithout the ACA
Exchanges
Medicaid and CHIP
Employment-Based
Nongroup and Other-4
-9
+16
Insured
Uninsured
-27
+24
0
50
100
150
200
250
300
0204060
19 C O N G R E S S I O N A L B U D G E T O F F I C E
The Long-Term Budget Outlook
20 C O N G R E S S I O N A L B U D G E T O F F I C E
Federal Debt Held by the Public
21 C O N G R E S S I O N A L B U D G E T O F F I C E
Number of People Age 65 or Older, by Age Group
1999 2004 2009 2014 2019 2024 2029 2034 20390
10
20
30
40
50
60
70
80
90
65 to 74
75 to 84
85 to 94
95 or OlderActual Projected
Millions of People
22 C O N G R E S S I O N A L B U D G E T O F F I C E
Federal Spending on the Major Health Care Programs, by Category
1999 2004 2009 2014 2019 2024 2029 2034 20390
1
2
3
4
5
6
7
8
Medicare
Medicaid, CHIP, and Exchange Subsidies
Percentage of Gross Domestic Product
Actual Extended Baseline Projection
23 C O N G R E S S I O N A L B U D G E T O F F I C E
Debt Held by the Public, Total Spending, and Total Revenues
24 C O N G R E S S I O N A L B U D G E T O F F I C E
Components of Total Spending
25 C O N G R E S S I O N A L B U D G E T O F F I C E
Components of Total Revenues
26 C O N G R E S S I O N A L B U D G E T O F F I C E
Federal Debt Given Different Rates of Growth of Federal Health Care Spending
1999 2004 2009 2014 2019 2024 2029 2034 20390
50
100
150
Extended BaselineWith EconomicFeedback
93
111
Higher Growth Rate132
Lower Growth Rate
Actual Projected
Percentage of Gross Domestic Product
27 C O N G R E S S I O N A L B U D G E T O F F I C E
Federal Debt Given Different Rates of Mortality Decline, Productivity Growth, Interest, and Growth of Federal Health Care Spending
1999 2004 2009 2014 2019 2024 2029 2034 20390
50
100
150
Extended Baseline WithEconomic Feedback
75
111
All Four Factors RaiseProjected Deficits159
All Four Factors LowerProjected Deficits
Percentage of Gross Domestic Product
Actual Projected
28 C O N G R E S S I O N A L B U D G E T O F F I C E
The Timing and Size of Policy Changes Needed to Make Federal Debt Meet Two Goals
2025
2020
2015
0 1 2 3 4 5Percentage of GDP
1.2
2.6
1.5
3.2
2.1
4.3
If actionbeginsin . . .
Its average percentage of GDPduring the past 40 years (39 percent)
Its current percentage ofGDP (74 percent)
The annual reduction in noninterest spending orincrease in revenues would need to be thispercentage of GDP. . .
To make federal debt held bythe public in 2039 equal . . .
29 C O N G R E S S I O N A L B U D G E T O F F I C E
Notes
Slides 2 through 5: For more information, see A Premium Support System for Medicare: Analysis of Illustrative Options (September 2013), www.cbo.gov/publication/44581.
Slides 7 through 13: For more information, see The Budget and Economic Outlook: 2015 to 2025 (January 2015), www.cbo.gov/publication/49892.
Slides 15 through 23: For more information, see The 2014 Long-Term Budget Outlook (July 2014), www.cbo.gov/publication/45471. CBO’s long-term projections were most recently published in July 2014; they generally reflect current law, following the agency’s April 2014 baseline budget projections through 2024 and then extending the baseline concept into later years.