Medicare and Medicaid spending

Hmm, this seems like it could be a big deal:

In its most recent baseline projections, CBO reduced its estimates of spending for the Medicare and Medicaid programs compared with its estimates in the August 2012 baseline. For the 2013–2022 period, projected spending for those programs is now $382 billion (or 3½ percent) below the agency’s estimates in August 2012.

In recent years, health care spending has grown much more slowly both nationally and for federal programs than historical rates would have indicated. For example, in 2012, federal spending for Medicare and Medicaid was about 5 percent below the amount that CBO had projected in March 2010.

In response to that slowdown, over the past several years CBO has made a series of downward adjustments to its projections of spending for Medicaid and Medicare. For example, from the March 2010 baseline to the current baseline, technical revisions—mostly reflecting the slower growth in the programs’ spending in recent years—have lowered CBO’s estimates of federal spending for the two programs in 2020 by about $200 billion—by $126 billion for Medicare and by $78 billion for Medicaid, or by roughly 15 percent for each program.

If this isn’t a short-term blip then this is really good news. Healthcare costs are the driver behind increasing deficits, so if these costs start to moderate there will be no long-term deficit problem. Given that this is a good time for deficit spending, perhaps this news will mean politicians will wait to see if there really is a problem before they start making big cuts. Ha ha, sorry, that’s a stupid thought.

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