Policy-ish

Health Costs Loom Over Federal Budget

Today we'll find out how much President Obama would like the government to spend next year. It's a lot. Just take a look at all the zeroes: $3,834,000,000,000. That's 3.8 trillion bucks for fiscal 2011.

CBO chart shows the rise of health spending as a percentage of GDP. i i

The elephant in the budget room remains health spending. A Congressional Budget Office chart shows the rising share of GDP going toward health care. CBO hide caption

itoggle caption CBO
CBO chart shows the rise of health spending as a percentage of GDP.

The elephant in the budget room remains health spending. A Congressional Budget Office chart shows the rising share of GDP going toward health care.

CBO

The administration expects the deficit to decline, a little, to a still enormous $1.267 trillion (or about a third of the budget) from $1.556 trillion in the current fiscal year, ending Sept. 30.

We can't tell you just yet exactly how much Obama expects to spend on health care. The details won't be coming out until later this morning. But we already know his idea to freeze discretionary spending for three years won't apply to Medicare, Medicaid or Social Security, the entitlement trio that's driving so much of the deficit. Medicaid may get another $25 billion, which would be quite a relief to governors of cash-strapped states across the country.

And that bring us back to health overhaul. Remember health overhaul? As the Congressional Budget Office reminds us, "The federal budget is on an unsustainable path, primarily because of the rising cost of health care and the aging of the U.S. population."

The big problem remains the pretty much automatic increases on entitlement spending, so much of which goes to health care. Just take a look at the scary chart from the Office of Management and Budget that shows the rising share of the economy going to Medicare and Medicaid.

Health care now sucks up more than 16 percent of GDP, even after a historic slowing due to the economic downturn. The chart shows how quickly Medicare and Medicaid, if left unchecked, will gobble up the economic capacity of the country.

Say what you will about the administration's stalled overhaul plan's ability to rein in health spending. What are the chances no plan will lead to a slimmer budget?

Update: The proposed 2011 budget's out and you can peruse the $901 billion chunk for the Department of Health and Human Services here. The request for FY 2011 represents a 10.8 percent increase over the $813 billion the administration expects to spend by the Sept. 30.

Medicaid, as expected, would get another $25 billion. Medicare would get trimmed a little—$722 million—but would still rise to more than $488 billion in FY2011 from $451 billion in 2010.

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