Health spending blamed for ballooning deficit projection

The White House's grim new budget projections, released Tuesday, show a decade-worth of deficits tallying $9.05 trillion, $2 trillion deeper than anticipated in February, the New York Times reports. Peter Orszag, the White House budget director, said "the key driver of our long-term deficits" is federal health spending, mainly on the ballooning Medicare and Medicaid programs, making health reform essential. "Over all, it underscores the dire fiscal situation that we inherited and the need for serious steps to put our nation back on a sustainable fiscal path," Orszag said, asserting that this White House was confronting a Bush administration legacy (Calmes, 8/25).

"The biggest effect of the deficit numbers may be felt on the health-care debate. Deficit worries will force Democrats to put new emphasis on cost-cutting efforts in crafting health legislation, said Sen. Charles E. Schumer (D., N.Y.). Democrats can't afford any 'slippage' on their pledge to fully pay for the overhaul, he said," the Wall Street Journal reports. Both parties acknowledged that the new projections would change the dynamic of the health debate, with Democrats pointing to heightened urgency, and one senior House Republican saying he believed rather than drawing support from Republicans, it would push Democrats away from the table (Weisman and Solomon, 8/26).

Roll Call: Sen. Max Baucus, D-Mont., said in a statement, "Today's budget reports serve as a clear illustration that health care spending is out of control and threatens the health care programs families rely on, such as Medicare and Medicaid.... The bipartisan health care legislation we are drafting in the Finance Committee will slow these growing health care costs by improving quality and making our system more efficient" (Drucker, 8/25).

Associated Press: Meanwhile, a separate report by Aon Consulting, a Chicago-based company, found that health insurance claims costs could increase more than 10 percent this year, according to a survey of 60 insurers. "[O]n average, insurers expect to pay out 10.5 percent more in claims costs in the next year — slightly less than the 10.6 percent increase forecast last year" (Murphy, 8/25).

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This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.