On Entitlements, It’s the Demographics, Stupid
Included in the Congressional Budget Office’s long-term budget outlook yesterday was one chart that should have significant consequences for upcoming debates over reforms to Medicare and entitlements. The chart on page 15 of the report demonstrates that, over the next 25 years, demographics count for at least half – and as much as three-quarters – of projected increases in spending on Medicare, Medicaid, Social Security, and Obamacare insurance subsidies. Here’s a copy of the chart:
What this analysis means is that, even if the growth of health costs does manage to slow (both CBO and the Medicare actuary think Obamacare’s cost reductions will not be sustainable in the long-term), slowing health costs alone won’t solve Medicare’s financial problems. Put another way, Medicare needs structural reform NOW – because nothing else can save the program. That’s the major lesson from yesterday’s report. And it’s a lesson policy-makers in both parties would be wise to heed.