CBO: Federal health spending to slow over next decade

Too much consolidation could be driving healthcare costs up

Federal spending growth in Medicare and Medicaid is projected to slow down over the next 10 years, according to a Congressional Budget Office report.

Government outlays for Medicare will add up to 3.7% of the gross domestic product in 2013, rising only to 4.3% of the GDP by 2022, the CBO predicts. These growth rate figures, which were released Wednesday, are significantly slower than the CBO had projected earlier this year.

The CBO's outlook for Medicaid also improved. In its report released this week, the CBO expects to see a $22 billion reduction in Medicaid spending over the next 10 years. The report attributes this drop to the Supreme Court's decision to make the Affordable Care Act's expansion of Medicaid optional for states.

Additionally, the CBO calculated the costs associated with Medicare's physician pay formula, a matter that is closely watched by long-term care groups. If Congress elects to keep Medicare physician payments at their current rate over the next decade, it would cost $245 billion more than if the scheduled 27% cut actually happens on Jan. 1. Historically, Congress has voted to prevent that cut from happening.

Click here to read the full CBO report.