Most of the anticipated growth in spending (beside interest payments) as a share of GDP over the long term is expected to come from the government’s major health care programs: Medicare, Medicaid, the Children’s Health Insurance Program, and the subsidies for health insurance purchased through the exchanges created under the Affordable Care Act (ACA).
CBO projects that, under current law, total outlays for those programs would grow much faster than the overall economy, increasing from just below 5 percent of GDP now to 8 percent in 2039 (net of Medicare premiums and certain other offsetting receipts).
Those projected
increases in spending for Social Security and the government’s major health care programs are attributable primarily to three causes: the aging of the population, rising health care spending per beneficiary, and the
ACA’s expansion of federal subsidies for health insurance.
In CBO’s projections, which generally reflect current law,
total federal spending for everything other than the major health care programs, Social Security, and net interest
declines to a smaller percentage of GDP than has been the case for more than 70 years. Such spending has been more than 8 percent of GDP each year since the late 1930s, including about
12 percent of GDP in 1974 and about
10 percent in 1994; CBO estimates that it will be about
9 percent of GDP in 2014. Under the assumptions used for this analysis, that spending is projected to fall
below 8 percent of GDP in 2020 and then to decline further, dropping to about
7 percent of GDP in 2039.
SOURCE:
CBO?s Long-Term Budget Projections Show a Substantial Imbalance in the Federal Budget - CBO
