OMB: Growth in Medicare, Medicaid Spending to Decrease over Next Decade

If one assumes that news of cuts in reimbursements of the two major healthcare entitlements (which probably will not happen) is never really good news for providers when accompanied by news of overall decreases in government spending on Medicare and Medicaid — then news of OMB-projected reductions in entitlement spending over the next decade essentially confirms this postulate. Under current fiscal policy, the government is expected to spend about $4 billion less this year on Medicare, matched with another $4 billion reduction over the next decade compared to the administration’s previous estimates, according to those revised projections.

When coupled with a virtually stagnant U.S. economy, a subsequent decline in payroll tax means finding alternatives to fund not only Medicare, but also Social Security. FY 2012 mandatory spending (which now includes funds spent on TARP funding) on Medicaid will top north of $450 billion. If more than half of the budget goes toward entitlement spending, it’s difficult to realize other options when it comes to managing discretionary expenses — even with President Obama’s push for healthcare reform. Choosing between raising taxes, decreasing SS payouts to retirees, or inflating the budget as a percentage of GDP — just to maintain fiscal gov’t solvency — is enough to give any healthcare policy wonk a massive headache.

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