CBO lowers healthcare spending estimates

The Congressional Budget Office (CBO) has lowered its healthcare spending estimates for 2013 to 2022. An Aug. 22 report projects Medicaid and Medicare spending will be $494 billion less than a March estimate had predicted.

The June 28 Supreme Court decision to make the Medicaid expansion provision of the Patient Protection and Affordable voluntary rather than mandatory played the biggest factor in the downward revisions.

The CBO’s March projections assumed a larger number of Medicaid enrollees over the next decade than its most recent projections. This accounts for $288 billion of the downward revision. Less than expected year-to-date spending in 2012 accounts for the remainder of the downward revision. The two federal healthcare programs are projected to spend a total of approximately $12 trillion over the next decade, according to the CBO’s most recent estimate.

Downward revisions due to the Supreme Court decision are expected to raise federal healthcare spending outside of the two large insurance programs for the elderly and the poor. The CBO’s most recent predictions estimate an additional $164 billion will be spent between 2013 and 2022 on health insurance subsidies than its previous prediction and $46 billion less in revenues are expected over the same period.

The report is available in its entirety on the CBO website.