CBO: Stimulus more expensive than expected, Medicare costs to double by 2020

A new Congressional Budget Office report "provides more ammunition for Republicans who say the stimulus has been long on spending and short on creating promised jobs," The Associated Press/ABC News reports. The report says the stimulus will cost $75 billion more than expected, because of increased unemployment, requirements for the food stamp program and the high popularity of an infrastructure bonds program. The report comes as Democrats consider a second stimulus bill that could include another extension of unemployment benefits, job creation tax credits and further help for jobless people to buy health coverage (Taylor, 1/26).

Medicaid spending is one of the largest parts of the stimulus package, but it proved less costly than anticipated, CNNMoney reports. "The largest decrease in cost was for the Medicaid match program, in which the government helps states pay for Medicaid expenses. The CBO now estimates that the program will cost $3 billion less than originally thought" (Goldman, 1/26).

The Wall Street Journal's Health Blog finds that the same CBO report also projects changes in Medicare costs over the next decade. The program's costs would nearly double from $528 billion this year to more than $1 trillion in 2020. And, that's if a scheduled 21-percent reduction in physicians' payments actually happens this spring. Related cuts have been planned since 2003, but have not happened because Congress intervened, and lawmakers of both parties say they would like to intervene again. Failure to enact the cuts would add another $300 billion to Medicare costs between now and 2020 (White, 1/26).

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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.