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Health

Rising health care costs and their consequences for federal health insurance programs constitute the nation's central fiscal challenge.

Sources of Growth in Projected Federal Spending
on Medicare and Medicaid (Percentage of GDP)
$The three swaths of the area chart show, for 2007 to 2082, effects of (1) the aging of the U.S. population on the projected growth in federal spending on Medicare and Medicaid; (2) excess cost growth, or the extent to which the increase in health care spending exceeds the growth of the economy; and (3) the interaction of the two. Aging accounts for only a small fraction of the increase; the main factor is excess cost growth.$

Inside CBO

Health is a growing area of analysis for CBO, with work done across the agency. CBO's health work is divided into two categories: (1) estimating the budgetary impact of federal health programs and (2) preparing studies on health policy issues. The Health unit in the Budget Analysis Division estimates budgetary impacts; it estimates the cost of proposed health legislation and prepares spending projections for federal health programs. The Health and Human Resources Division conducts studies of health issues, including Medicare, Medicaid, pharmaceuticals, public health, and private health markets; it also develops models that underlie cost estimates. The National Security Division conducts studies of the health care provided by the Departments of Defense and Veterans Affairs. The Microeconomic Studies Division also analyzes health issues, especially those related to competition or market structure, including most recently prescription drug pricing and research and development in the pharmaceutical industry.

Panel of Health Advisers

Consisting of acknowledged experts in health care, CBO's panel of health advisers meets periodically to examine research in health policy and to advise the agency on its analyses of health care issues. The panel thus helps to further the reliability, professional quality, and transparency of the agency's work.

Health Jobs at CBO

CBO continually seeks health economists, analysts, and research assistants for health-related programs.

Health Policy Internship

CBO has also devoted an internship to health policy, which is for graduate students. It may be available on a summer, semester, or year-long basis depending on work needs and students' availability.

From the Director

Rising health care costs and their consequences for Medicare and Medicaid constitute the nation's central fiscal challenge. Without changes in federal law, the government’s spending on those two programs is on a path that cannot be sustained.

Over the past 30 years, total national spending on health care has more than doubled as a share of gross domestic product (GDP). According to CBO’s latest projections in its Long-Term Outlook for Health Care Spending, that share will double again by 2035, claiming more than 30 percent of GDP. Thereafter, health care costs continue to account for a steadily growing share of GDP, reaching more than 40 percent by 2060 and almost 50 percent by 2082. Federal spending on Medicare and Medicaid, which accounts for 4 percent of GDP today, is projected to rise to 9 percent by 2035 and 19 percent by 2082 under current law.

Although the aging of the population is frequently cited as the major factor contributing to the large projected increase in federal spending on Medicare and Medicaid, it accounts for only a modest fraction of the growth that CBO projects. The main factor is excess cost growth-or the extent to which the increase in health care spending exceeds the growth of the economy. The gains from higher spending are not clear, however: Substantial evidence exists that more expensive care does not always mean higher-quality care. Consequently, embedded in the country’s fiscal challenge are opportunities to reduce costs without impairing health outcomes overall.

Policymakers and the public need more analysis of the options for capturing those opportunities. CBO is therefore substantially augmenting its capabilities and work on health care issues--and this Web page collects many of the agency's activities in the area.