CBO updates Medicare, Medicaid projections

Medicare spending per beneficiary is projected to increase at an average annual rate of 1.6% between 2016 and 2026, after adjusting for inflation, according to updated budget and economic projections by the Congressional Budget Office. That’s down from average annual growth of 4% between 1985 and 2007, excluding a jump in 2006 when Part D was implemented, CBO said. While costs per beneficiary are rising much more slowly than in the past, CBO projects Medicare spending will grow an average 6% per year over the next 10 years as growing numbers of baby boomers turn 65 and become eligible for benefits. The agency expects average annual expenditures from the Hospital Insurance Trust Fund, used to pay hospitals and providers of post-acute care services under Part A of the Medicare program, to outpace noninterest income to the fund in all but one year over the period and to exhaust the fund in 2026, four years sooner than the Medicare Board of Trustees projected last May. CBO now projects that in 2025 about 14.5 million people who will be eligible for Medicaid as a result of the Affordable Care Act will enroll in the program, up from its 11.5 million estimate in August. CBO’s 10-year projections of spending for Medicaid are 4% higher than the agency estimated in August.