A $160 billion net decrease from earlier projected federal healthcare spending estimates helped slow somewhat the federal government's expected accumulation of debt (PDF) over the coming decade, according to Congress' budget scorekeeper.
The decrease comes despite projections that spending on Medicare and Medicaid providers will increase over the coming decade by $163 billion more than was previously expected, according to a revised outlook from the Congressional Budget Office. That increase over CBO projections released in March stemmed from lower expected productivity gains and higher costs in the healthcare sector. Specifically, the automatic provider updates, which are tied to changes in the prices of labor, goods and services in the healthcare sector and offset by expected productivity gains, were projected to increase by $136 billion, or about 2%, in Medicare and by $27 billion in Medicaid.
But those increases were more than offset by the fiscal effects of the U.S. Supreme Court's decision on the healthcare law that effectively made the Medicaid expansion optional. That, in turn, lowered the expected federal costs of the law. Specifically, the CBO projected $325 billion, or 7%, less federal Medicaid spending over the next 10 years in part because some states are not expected to expand their programs.
However, the same Medicaid reduction also will increase the number of people expected to enroll in the coming health insurance exchanges and the amount expected to be spent on income-based subsidies.