CBO: Medicaid spending to rise 9%

Medicaid spending will rise 9% -- to $176 billion – in 2005, according to new projections from the Congressional Budget Office released Tuesday. Medicare spending will rise a more modest 8%, to $297 billion, the CBO added.

Overall, the federal deficit is expected to reach a record  $422 billion in 2005.

"Over the long term, growing resource demands for major entitlement programs will exert pressure on the budget that economic growth alone is unlikely to alleviate," said Douglas Holtz-Eakin, CBO director, the agency's September economic update, which was published Tuesday.

Adding the controversial first-time drug benefit provisions to the Medicare program is expected to spike federal Medicare spending more than 30% alone over the next three years, according to the CBO.