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CBO lowers 10-year Medicare, Medicaid spending projections

February 6, 2013
by Pamela Tabar, Senior Editor
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Spending on Medicare and Medicaid programs has been lower than anticipated for the past three years, prompting the Congressional Budget Office (CBO) to adjust its projections for the next decade, according to a report released Tuesday.

Medicare spending had an average annual growth of 8.4 percent between 2002 and 2009, but has dropped to only 2.9 percent annually since 2009, the report notes. The CBO’s updated estimates suggest the spending amounts will remain near 3 percent until 2019, when spending is expected to increase to 3.5 percent during 2019-2023.

Medicaid spending also is expected to be approximately 5.5 percent lower (about $236 billion less) than originally projected. Much of the per-beneficiary spending reductions, however, are tied to the Affordable Care Act’s Medicaid expansion initiatives and the assumptions that savings will balance out the costs of setting up the programs.

The CBO report estimates that Medicaid will have 12 million beneficiaries by 2022.

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