The 2020 Long-Term Budget Outlook

For Medicaid, the average annual rate of excess cost growth implicit in CBO’s baseline projections for the federal share of such spending is 1.6 percent from 2028 through 2030—0.1 percentage point lower than last year’s average for 2027 through 2029. The projected rate for 2031 is 1.6 percent—about 0.1 percentage point lower than last year’s estimate for 2030. In the last two decades of the projection period, excess cost growth is projected to average 1.3 percent, about 0.1 percentage point lower than last year’s estimate for the 2030–2049 period and 0.6 percentage points higher than the average rate from 1985 to 2017.

For private health insurance premiums, which CBO uses as an input in its calculation of marketplace subsidies, the average annual rate of excess cost growth from 2028 through 2030 implicit in CBO’s baseline projections is 1.5 percent, which is higher than last year’s estimate of 1.4 percent for the 2027–2029 period. The projected rate for 2031 is 1.5 percent—the same as last year’s estimate for 2030. Over the last two decades of the projection period, the rate of excess cost growth is projected to average 1.2 percent—about the same as last year’s estimate for the 2030–2049 period and 0.9 percentage points lower than the average rate from 1985 to 2017.

Other Mandatory Spending. CBO’s projections of other mandatory spending as a share of GDP in the near term are significantly higher than they were last year, and its projections for most of the long-term projection period are roughly the same as they were last year. Such spending includes outlays for retirement programs for federal civilian and military employees, certain programs for veterans, certain refundable tax credits, the Supplemental Nutrition Assistance Program (SNAP), and all other mandatory programs aside from Social Security and the health care programs described above.

Other mandatory spending is now projected to account for 11.0 percent of GDP in 2020 and 3.7 percent in 2021—8.4 percentage points and 1.1 percentage points more, respectively, than CBO projected such spending would be in those years last year. Those increases in projected mandatory spending are attributable to provisions of legislation enacted to address the pandemic and the related economic downturn—particularly the Paycheck Protection Program, the expansion of unemployment compensation, and the recovery rebates.

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