WASHINGTON—Gross spending on the Medicare program is expected to total $528 billion in 2010, $735 billion in 2015, and $1,038 billion in 2020, according to the Congressional Budget Office. The CBO also expects for Medicare spending to rise (as a percentage of gross domestic product (GDP) from 3.5 percent in 2009 to 4.6 percent in 2020.
CBO estimates Social Security, Medicare and Medicaid will account for about 70 percent of mandatory spending (excluding offsetting receipts) in 2010. However, by 2020, this percentage is expected to climb to 80 percent of mandatory spending under current law. Under current law, the CBO also reports that Medicare and Medicaid spending (combined) is expected to grow faster than the economy, reaching 6.6 percent of GDP by 2020 and potentially reaching 10 percent by 2035.
According to the report: “The single greatest threat to budget stability is the growth of federal spending on healthcare—pushed up both by increases in the number of beneficiaries of Medicare and Medicaid (because of an aging population) and by growth in spending per beneficiary that outstrips growth in per capita GDP. For the nation's fiscal situation to be sustainable in future decades, growth in such spending will have to be reduced relative to its historical trend and to CBO's projected path."
If current laws and policies remained unchanged, the CBO projects that the federal budget would show a deficit of about $1.3 trillion for fiscal 2010.