Federal costs for Medicare and Medicaid could spiral to more
than 21 percent of the gross domestic product by 2050, according to
a recent Congressional Budget Office long-term budget forecast. In
2003, Medicare and Medicaid spending equaled only 3.9 percent of
the nation's GDP.
“As health care costs continue to grow faster than the
economy and the baby boom generation nears eligibility for Social
Security and Medicare, the United States faces inevitable decisions
about the fundamentals of its tax and spending policies,” the
forecast said. Unless taxation reaches “unprecedented”
levels, the forecast continued, “current spending policies
will probably be financially unsustainable over the next 50
The report analyzed the long-term effects of several options to
reduce spending, including competition and reducing provider
payments. “Costs might be reduced through competition or
disease management, but there is currently too little evidence to
conclude that such approaches would significantly reduce Medicare's
total cost,” the forecast stated.
Regarding provider payment reductions, “if providers could
not charge enough to cover the costs of providing a service, this
policy could restrict Medicare patients' access to care.” To
view the complete report, visit target="_blank">www.cbo.gov.
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