Aging of the Population. In CBO’s projections, the aging of the baby-boom generation (people born between 1946 and 1964) and improved life expectancy increase the share of the population that is age 65 or older from 16 percent to 22 percent between 2019 and 2050.30

Aging accounts for more than the projected increase in Social Security spending as a percentage of GDP. In other words, if not for the aging of the population, spending on Social Security as a share of the economy would decline from 4.9 percent of GDP in 2019 to 4.7 percent of GDP in 2050. Because the share of the population that is 65 or older is growing, however, a larger segment of the population will receive Social Security benefits, boosting federal spending for the program. Taking that factor into account, CBO projects that spending on Social Security as a share of the economy would increase to 6.3 percent of GDP in 2050.

Over the 2019–2050 period, aging accounts for about one-third of the projected increase in spending, relative to GDP, for the major health care programs in total. The effects of aging on spending for Medicare are the most significant driver of the effects of aging on spending for the health care programs overall, because Medicare is the largest such program, and most beneficiaries qualify for it at age 65. As that group becomes larger and older, on average, Medicare spending will increase, not only because the number of beneficiaries will rise but also because people tend to require more health care as they age.

Rising Health Care Costs per Person. Even though growth in health care costs per person has slowed recently, over the next 30 years such costs are projected to continue to grow faster than potential GDP per person. From 2020 through 2050, the average rate of excess cost growth in CBO’s projections is 1.2 percent for Medicare and 1.5 percent for Medicaid. In the agency’s extended baseline projections, excess cost growth accounts for about two-thirds of the increase in spending, measured as a share of GDP, for the major health care programs between 2019 and 2050.