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A Project of The Annenberg Public Policy Center

The Long-Term View

As part of his ongoing health-care-overhaul tour, President Barack Obama held a town hall event July 1 in Annandale, Va. Among the president’s messages: Medicare and Medicaid spending are getting out of control. And he’s right.

Obama said: “And for those who rightly worry about deficits, the amount our government spends on Medicare and Medicaid will eventually grow larger than what our government spends today on everything else combined,” adding that a recent Congressional Budget Office study showed that “when you look at the rising costs of entitlement, 90 percent of it is Medicare and Medicaid — it’s not Social Security — 90 percent of it comes from the federal share of health care costs.”

It’s true that the nonpartisan CBO did say that — but we’ll note that the projections are for rising costs relative to the nation’s gross domestic product over the next 70 years. (The president did say “eventually.”) Over the next 25 years, those programs make up about 80 percent of spending growth.

CBO Director’s Blog, June 29: Under current law, the federal budget is on an unsustainable path: projected spending rises well above projected revenue, producing growing budget deficits and accumulating debt. Almost all of the projected growth in spending relative to GDP (other than interest payments on the debt) is attributable to Medicare, Medicaid, and Social Security. For these three programs together, the two health programs account for 80 percent of spending growth over the next 25 years and 90 percent over the next 70 years.

The CBO’s full report also said that under current law, spending on Medicare and Medicaid will jump from about 5 percent of GDP to more than 17 percent of GDP by 2080. “That projection means that in 2080, without changes in policy, the federal government would be spending almost as much, as a share of the economy, on just its two major health care programs as it has spent on all of its programs and services in recent years.”