First time ever: Gov’t spending on healthcare spending surges past Social Security

© Phil Noble
The US government spent $936 billion last year on health programs including Medicare, Medicaid, and subsidies related to the Affordable Care Act – $54 billion more than Social Security received, according to the Congressional Budget Office.

This marks the first time in history that federal spending on healthcare-related programs has outstripped Social Security, the Congressional Budget Office said in its 10-year fiscal outlook report, which was released on Monday.

The report found that health programs, including Medicare, Medicaid, the Children’s Health Insurance Program, and Affordable Care Act subsidies, cost $936 billion last year, marking a 13 percent increase amounting to $105 billion when compared to 2014.

“The sharp rise over the past two years occurred mainly because of new enrollees added by the 30 states, plus the District of Columbia, that had adopted the optional expansion of coverage authorized by the ACA,” the report said.

A $48-billion hike in Medicaid spending represented the largest increase at 16 percent, the report found. Spending on Social Security, in contrast, totaled $882 billion in 2015, marking a 4 percent increase compared to 2014.

The government is expected to spend $56 billion on federal health insurances subsidies for 11 million people in 2016.

The report also showed that spending on mandatory programs rose by $200 billion, or 9.5 percent, last year. That’s almost double the average annual rate of increase, which has been 5.4 percent over the past decade.

The Washington Post reported that the booming healthcare costs are likely to lead congressional Republicans to demand cuts in mandatory spending in upcoming budget proposals. The Hill reported that swelling healthcare costs are likely to become the center of an election-year debate on Obamacare and its impact on the nation’s finances.

The report also acknowledged that the federal budget deficit will grow to $544 billion in 2016, up from $439 billion in 2015. This is the first increase since the end of the financial crisis in 2009, which was followed by six consecutive years of declines. The deficit is expected to grow because of a huge dip in revenue due to tax cuts enacted last month.

The CBO also said it expects the rising deficit to accompany a continually-improving domestic economy in the next decade.

“The economy will expand solidly this year and next. Increases in demand for goods and services are expected to reduce the quality of underused labor and capital…encouraging greater participation in the labor force by reducing the unemployment rate and pushing up compensation,” the report continued. “That reduction in slack will also push up inflation and interest rates.”

The nonpartisan CBO estimates the impact of legislation on the budget and economy for lawmakers on Capitol Hill.