The Congressional Budget Office upped its 2006-15 Medicare spending estimate by $70 billion to about $5.5 trillion, primarily because of higher estimated costs under the new prescription drug benefit. The CBO said it added $54 billion to projected net spending under the drug benefit over the 10-year period, reflecting final formulary rules and eligibility standards for the low-income subsidy. Some $36 billion of the increase applied to 2004 through 2013, the original period for which the CBO projected a net drug-benefit cost -- $640 billion after premium receipts but before Medicaid savings from the cost-shift -- resulting in a new total of $676 billion for the period. The CBO said it would provide additional details of its drug benefit analysis in a March 15 report. The CMS recently estimated net federal spending on the benefit at $723 billion for 2006-15.
Meanwhile, the agency said President Bush's Medicaid proposals would yield smaller net savings than expected, $8.5 billion through 2010 instead of the $13 billion projected by the White House. Overall net savings from cuts to all programs also fell below the White House estimate -- $50.8 billion through 2010 instead of $62 billion -- because of spending rates and other factors, the CBO said. Read the preliminary report. -- by Ralph Loos