WASHINGTON – Contrary to popular belief, healthcare spending over the next several decades will not be dominated by the coming retirement of the baby boomer generation, a new report from the Congressional Budget Office indicates.
“While that is a factor, it is not even close to the most important factor,” CBO Director Peter Orszag said at a recent Kaiser Family Foundation forum. “The effect of aging population is present, but 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.”
The 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 the CBO, healthcare spending has more than tripled between 1960 and today is expected to double again by 2035, rising to more than 30 percent of the gross domestic product.