Costs of Health Care Programs and Social Security Poised to Bust the Country

Peter Suderman
reported the other day that the federal government’s
unsustainable spending spree continues apace, with debt expected to
continue stacking up, “to a percentage of GDP seen only once before
in U.S. history (just after World War II),” in the words of the Congressional
Budget Office. The health care component of those expenses is
getting the most attention, he noted.

Why is the health care component so talked about? Because health
care and Social Security are projected to double in cost
as a share of GDP. Let’s quote the CBO again:

Federal spending for Social Security and the government’s major
health care programs—Medicare, Medicaid, the Children’s Health
Insurance Program, and subsidies for health insurance purchased
through the exchanges created under the Affordable Care Act—would
rise sharply, to a total of 14 percent of GDP by 2039, twice the 7
percent average seen over the past 40 years. That boost in spending
is expected to occur because of the aging of the population, growth
in per capita spending on health care, and an expansion of federal
health care programs.

Interest payments will also more than double, from 2 percent of
GDP to 4.5 percent. By contrast, “total spending on everything
other than Social Security, the major health care programs, and net
interest payments would decline to 7 percent of GDP by 2039—well
below the 11 percent average of the past 40 years.”

Which is to say that spending on Social Security, Medicare, and
other health programs is expanding at a rate that the federal
government can’t begin to afford. Servicing the resulting debt is
also becoming increasingly spendy.

Getting the federal government to live within its means doesn’t
involve trimming a little fat. It’s going to require strictly
reining-in and reducing its role.