Rising healthcare costs continue to squeeze the federal budget, although the deficit outlook has improved since the start of fiscal 2007, the Congressional Budget Office said in a new report. The CBO reduced a previous estimate for federal Medicare spending over the next 10 years by $445 billion. However, it warned that increasing demands on the program will exert pressure on the federal budget that economic growth alone is unlikely to alleviate. Medicare and Medicaid spending are expected to grow about 8% annually over the period. The Part D prescription drug program, meanwhile, will hit $119 billion in fiscal 2017, up from $38 billion in fiscal 2007, for an average annual growth of 12.5%, the CBO said. The office said its 2006 estimates for Part D spending were significantly off, largely because bids under the competitive bidding process came in about 15% lower than in 2006. The CBO projected the 2007 federal deficit at about $200 billion, compared with a 2006 deficit of $248 billion. In 2012, however, the U.S. will have a $170 billion surplus, the CBO said. Read the report. -- by Matthew DoBias
Health costs pinch U.S. budget: CBO
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