The Long-Term Costs of Major Health Care Programs: Fiscal Implications and Projection Methods

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The Long-Term Costs of Major Health Care Programs: Fiscal Implications and Projection Methods Presentation to the Joint Network on the Fiscal Sustainability of Health Systems, Organisation for Economic Co-operation and Development, Paris, France February 16, 2015 Jessica Banthin, Ph.D. Deputy Assistant Director, Health Congressional Budget Office

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Who Makes Federal Budget Projections in the United States? Executive branch Legislative branch

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What Projections Does the Congressional Budget Office Make? 10-year baseline budget projections—three times per year Long-term budget projections—once a year

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What Is the Purpose of CBO’s Budget Projections? Illustrate implications of generally following current law Serve as a benchmark for measuring proposed changes

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Federal Debt Held by the Public

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Debt Held by the Public, Total Spending, and Total Revenues

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Components of Total Revenues

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Components of Total Spending

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Federal Spending on Major Health Care Programs, by Category

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How is Health Care Spending Projected? Next 10 years: detailed analysis of programs Later years: fairly mechanical estimates Number of people who will receive benefits Growth in spending per beneficiary

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Changes in Population, by Age Group

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Causes of Projected Growth in Federal Spending for Social Security and Major Health Care Programs

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Possible Approaches to Reducing Federal Health Care Spending Improve the health of the population Reduce federal subsidies for health insurance Reduce tax preferences for employment-based health insurance Pay Medicare providers in different ways Make larger structural changes to federal health care programs Undertake other possible reforms