WASHINGTON - Contrary to popular belief, baby boomers aren't projected to be the major factor in healthcare spending increases over the next several decades, according to a new report from the Congressional Budget Office.
CBO Director Peter Orszag said the report dispels a common belief that the nation's projected long-term healthcare spending will be driven mostly by the coming retirement of the baby boomer generation.
"[W]hile that is a factor it is not even close to the most important factor," Orszag said at a recent Kaiser Family Foundation forum. "[T]he effect of aging population is present, it's not the dominant force. The aging population distribution accounts for only about 10 percent of the projected increase in Medicare and Medicaid costs. We have been largely misdiagnosing the nation's fiscal problem."
CBO concludes in its November release of a bi-annual study on healthcare spending that there is an opportunity to lower healthcare costs outside of Medicare and Medicaid without harming quality.
"There is often described a medical effectiveness curve, which suggests that over some range of spending, as you spend more, health outcomes improve, but at some point that curve flattens out and might even turn down," Orszag said. "I believe there's a substantial amount of evidence that in the United States we're either on the flat part or the downward-sloping part of that curve."
According to CBO, healthcare spending has more than tripled between 1960 and today is expected to double again between today and 2035, rising to more than 30-percent of the Gross Domestic Product.
The CBO report projects Medicare and Medicaid spending, now at 4 percent GDP, to more than triple by 2050.
According to Orszag, the difficulty comes in projecting the future of healthcare spending in light of changing federal policy.
Whether or not federal policy is successful in slowing healthcare spending, CBO projects that employers, households, insurance plans and state governments will try to constrain the growth. This will be done through "potentially painful steps," such as slower adoption of technology, higher cost sharing and more restrictive employer plans, Orszag said.