Rising Costs Could Double Federal Health Care Spending and Push Debt to 200 Percent of GDP by 2037

June 5, 2012

The nonpartisan Congressional Budget Office today released a long-term estimate of the growing share of the federal budget that will be consumed by federal health care programs.

  • If current laws remain in place, spending on the major federal health care programs alone would grow from more than 5 percent of GDP today to almost 10 percent in 2037 and would continue to increase thereafter. Underlying these trends, health care spending on a per capita basis has annually grown 1.6 percentage points faster than the nation’s GDP.
  • The impact on our nation’s debt is sobering. CBO estimates that if we continue under “current policies,” the federal debt would exceed 90 percent of GDP in just ten years.
  • Beyond that, the debt would approach 200 percent of GDP in 2037.

And the situation may turn out to be worse than even these numbers predict. As CBO explains, "the agency does not currently have an analytic basis for projecting the effects of the ACA on the growth rate of the federal health care spending over the very long term."  Indeed, the health care law is on a trajectory to increase federal spending on health care with its expensive eligibility expansions and mandates. CBO concludes, “The explosive path of federal debt under the alternative fiscal scenario underscores the need for large and timely policy changes to put the federal government on a sustainable fiscal course.”