The 2020 Long-Term Budget Outlook

For the rest of the decade, spending in dollar terms is lower in the current projections than it was in last year’s, but as a percentage of GDP, such spending is higher because the agency’s projections of GDP are now lower. From 2031 to 2049, net spending for Medicare as a share of GDP is projected to be a total of about 0.2 percentage points lower than CBO projected last year because the agency lowered its population projections and thus its projections of the number of Medicare beneficiaries (see Appendix A[42]).

Medicaid, CHIP, and Marketplace Subsidies. As a percentage of GDP, outlays for Medicaid and CHIP, together with spending to subsidize health insurance purchased through the marketplaces established under the Affordable Care Act and related spending, are projected to be an average of 0.4 percentage points higher from 2020 to 2023 than they were in last year’s projections. In nominal dollars, such outlays are projected to be higher through 2022 and about the same in 2023. The differences from last year’s projections stem primarily from changes in Medicaid projections. In the near term, deterioration in the economy has caused projected enrollment in Medicaid to rise. In addition, legislation has raised matching rates (that is, the portion of costs the federal government must cover) and required continuous coverage for all enrollees in the program during the public health emergency regardless of any changes in their income or circumstances that would otherwise have caused them to become ineligible.10 The effects of those changes in law persist through December 2022 in CBO’s projections.

From 2024 through 2030, the payments that Medicaid makes to providers grow at a slower pace in CBO’s current projections than in last year’s because of a downward revision to the agency’s forecast of inflation; thus, the agency’s projections of Medicaid spending are now lower. After the first decade in CBO’s current projections, spending for Medicaid, CHIP, and the marketplace subsidies is 0.1 percentage point lower, on average, than projected last year. That reduction stems from a downward revision to the agency’s population projections, which reduced the projected number of Medicaid beneficiaries.

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