The Direction Of This Chart Could Change Everything You Think About Healthcare Costs And The Deficit

Business Insider

President Barack Obama released his 2013 Economic Report on Friday, which contains information relevant to the current budget debate over future spending on government health care programs.

Both political parties agree that the growth of Medicare and Medicaid spending needs to be curbed. Republican Paul Ryan wants to cut into these programs more in the House GOP's budget than Senate Democrats do in their new budget.

But Obama's Economic Report contains a chart that runs contrary to the common line of thinking in Washington, based on calculations from the President's Council of Economic Advisers on the Medicare Trustees' 2012 report.

Here's the key chart:

The chart shows that there's a big difference between previous projections and this new look, which forecasts Medicare's future based on the average annual growth rate over the last five years.

It also shows that in 2085, Medicare would make up 3.8 percent of the nation's GDP spending, instead of the previously projected 6.7 percent. To compare, Medicare spending made up about 3.7 percent of GDP in 2011, according to the 2012 Medicare Trustees report.

In the report, Obama warns to not treat the chart as a forecast — rather, as an "indication of how sensitive long-term  projections are to the assumed rate of growth of Medicare spending per  beneficiary."

Wonkblog's Sarah Kliff explains why it could shift discussion in Washington about future Medicare spending and current reform:

If that cost growth persists, it could make all the difference for Medicare. ... The "if" there is crucial:  We don’t know whether this cost growth slowdown is permanent or temporary, a factor of Americans cutting back on care during the recession. [...]

This data underscores how important the changes happening in our health-care system, right now, will be to the future of health-care spending. If they stick around, they could completely reorient the typical Washington discussion of Medicare as a budget-buster.



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