'Mandatory' Federal Health Care Spending Now Tops $1,000,000,000,000

By Terence P. Jeffrey | May 3, 2017 | 5:41pm EDT
President Obama and Speaker Ryan at the 2016 State of the Union. (Screen Capture)

(CNSNews.com) - "Mandatory" federal health care spending under what the Congressional Budget Office calls "major health care programs" exceeded $1,000,000,000,000 for the first time in fiscal 2016, according to the latest historical data published by the CBO.

The "major health care programs" included in the CBO's historical tables on annual "mandatory outlays" include Medicare, Medicaid, the Children's Health Insurance Program and subsidies for people buying health insurance through the Obamacare exchanges.

"Mandatory" federal spending on these major health care programs, according to the CBO's data, increased by 48.3 percent from fiscal 2008 to fiscal 2016, when measured in constant 2016 dollars.

According to the CBO's data, this type of federal spending was more than 20 times greater in fiscal 2016 than it was in 1969--the year President Lyndon Johnson (who signed Medicare and Medicaid into law in 1965) was succeeded by President Richard Nixon.

In fiscal 2016, the federal government spent a net of $1,011,800,000,000 on major health care programs, according to CBO.

That was up from the net $936,500,000,000 (in constant 2016 dollars) it spent on these programs in fiscal 2015. (CNSNews.com used the Bureau of Labor Statistics inflation calendar to convert the nominal spending amounts reported by CBO into constant 2016 dollars.)

In the three years since the Obamacare exchanges opened at the beginning of fiscal 2014, net spending on major health care programs has increased by $216,590,000,000, climbing from $795,210,000,000 in fiscal 2013 (the last fiscal year before the exchanges opened) to the record $1,011,800,000 of fiscal 2016.

That is an increase of about 27.2 percent.

According to CBO, spending on major health care programs consists “of spending for Medicare (net of premiums and other offsetting receipts), Medicaid, and the Children’s Health Insurance Program as well as outlays to subsidize health insurance purchased through the marketplaces established under the Affordable Care Act and related spending.”

Under the Obamacare law, people who buy insurance through the government exchanges can receive a subsidy for the premiums they pay if their household income is between 100 percent and 400 percent of the poverty level.

“The premium credit is refundable,” explains the Congressional Research Service, “so individual may claim the full credit amount when filing their taxes, even if they have little or no federal income tax liability.”

“The credit also is advanceable,” said CRS, “so individuals may choose to receive the credit on a monthly basis to coincide with the payment of insurance premiums.”

The Patient Protection and Affordable Care Act--AKA Obamacare--also liberalized eligibility for Medicaid. According to the Centers for Medicare and Medicaid Services, between the July-to-September period of 2013 (just before the Obamacare exchanges opened) and January 2017, approximately 17,298,407 people were added to rolls of Medicaid and CHIP.

As of this January, according to CMS, there were 75,135,662 people enrolled in Medicaid or CHIP.

Net federal spending on major health care programs has also increased dramatically as a percentage of Gross Domestic Product. In 1967, according to CBO, it equaled 0.4 percent of GDP. In 2016, it equaled 5.5 percent.

In "The 2017 Long-Term Budget Outlook," the CBO estimates that on the nation’s current path, net federal spending on major health care programs will continue to rise as a share of GDP.

“In 2017, net federal spending for the major health care programs will amount to 5.5 percent of GDP, CBO estimates,” says the outlook. “If current laws generally remained in place, net outlays for those programs would increase to 9.2 percent in 2014.”

“Medicare spending, net of offsetting receipts (mostly premiums paid by enrollees), would increase from about 3.1 percent of GDP today to 6.1 percent in 2047,” said CBO, “and it would account for more than three-quarters of the increase in spending for major health care programs over the next 30 years.”

“Spending on Medicaid and CHIP, combined with outlays for the marketplace subsidies and related spending, would rise from 2.4 percent of GDP today to 3.2 percent in 2047.”

In fiscal 1969, when President Johnson, who signed Medicare and Medicaid into law, left office, the federal government spent a net of $49,310,000,000 (in constant 2016 dollars) on major health care programs, according to CBO. The $1,011,800,000,000 it spent in fiscal 2016 was 20.5 times that amount.

In fiscal 2008, the year before President Obama, who signed the Affordable Care Act, entered office, the federal government spent a net of $682,280,000,000 on major health care programs. The $1,011,800,000,000 it spent in fiscal 2016, the year before Obama left office, was $329,520,000,000—or about 48.3 percent—more than the spending in fiscal 2008.

From fiscal 1969 to fiscal 2016, net spending on major health care programs rose from 0.8 percent of GDP to 5.5 percent, according to CBO. From 2008 to 2016, it rose from 4.0 percent to 5.5 percent.

[This story has been updated.]

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